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No instant penalty for late tax return filers

Paloma Kubiak
Written By:
Paloma Kubiak

HMRC has confirmed it will delay automatic late filing penalties for self-assessment users who miss the 31 January 2021 deadline.

As long as tax returns are filed online by Sunday 28 February 2021, self-assessment users won’t be hit with an automatic £100 fine for missing the 31 January deadline.

However, self-assessment customers will still be obliged to pay their tax bill by 31 January. Interest will be charged from 1 February on any outstanding liabilities. Customers can pay online, or via their bank, or by post before they file.

For those who can’t afford to pay their tax bill on time, they can apply to spread the payments over a 12-month period. But they will need to file their 2019/20 tax return before setting up a ‘Time to Pay’ arrangement.

So far, nearly nine million people have filed their tax return but HMRC estimated 12 million are due this year, leaving three million still outstanding in the last week before deadline.

It added that “it has become increasingly clear from the filing rate that some taxpayers and agents cannot file on time”.

‘Breathing space’

HMRC’s chief executive, Jim Harra, said: “We want to encourage as many people as possible to file their return on time, so we can calculate their tax bill and help them if they can’t pay it straight away.

“But we recognise the immense pressure that many people are facing in these unprecedented times and it has become increasingly clear that some people will not be able to file their return by 31 January.

“Not charging late filing penalties for late online tax returns submitted in February will give them the breathing space they need to complete and file their returns, without worrying about receiving a penalty.

“We can reasonably assume most of these people will have a valid reason for filing late, caused by the pandemic.”

Normally, late filing penalties are applied to all returns filed after the 31 January deadline. Penalties can be cancelled if a filer has a reasonable excuse for submitting their return late.

HMRC has previously said it was keeping the situation closely under review after reports emerged it that filers could use coronavirus as a way to appeal the £100 penalty as part of the ‘reasonable excuse policy’.