HMRC Wave Fines For Late Payment, Accountancy Firm, Bakewell

If you have been impacted by Coronavirus in 2021 and unable to fill in your tax return, HMRC will waive fines for those who file their self-assessment tax return late, however it’s not that simple for all…

HMRC has recently announced that that will not charge:

  • Late filing penalties for those who file online by 28‌‌ ‌February 2022.
  • Late payment penalties for those who pay the tax due in full or set up a payment plan by 1‌‌ ‌April 2022.

This will give customers and their representatives additional time if they need it and will operate in the same way as the equivalent waivers last year. However, HMRC is encouraging customers to file and pay on time if they can.

Time To Pay

If Coronavirus has negatively affected your cashflow and you are struggling to pay your tax in full by the deadline, there are Time To Pay options available. Once you have filed your 2020-21 tax return, you can set up an online payment plan to spread Self Assessment bills of up to £30,000, over and up to 12 monthly instalments. In some cases you may need to speak to HMRC on the telephone to set this up.

HMRC Penalties – What You Need To Know

The payment deadline for Self Assessment is 31‌‌ ‌January 2022, interest will be charged from 1‌‌ ‌February 2022 on any amounts outstanding. Normally a 5% late payment penalty is charged on any unpaid tax that is still outstanding on 3‌‌ ‌March.

Self Assessment customers will not be charged the 5% late payment penalty if they pay their tax or set up a payment plan by midnight on 1‌‌ April 2022.

There is no change to the filing or payment deadline and other obligations are not affected. This means that:

  • interest will be charged on late payment. The late payment interest rate from 4 ‌‌January 2022 is 2.75%
  • a return received online in February will be treated as a return received late where there is a valid reasonable excuse for the lateness.

A 5% late payment penalty will be charged if tax remains outstanding, and a payment plan has not been set up, by midnight on 1‌‌ ‌April 2022. Further late payment penalties will be charged at the usual 6 and 12 month points (August 2022 and February 2023 respectively) on tax outstanding where a payment plan has not been set up.

HMRC have advised that they will not charge late filing penalties for SA700s (Non-Resident Companies) and SA970s (Trustees of Registered Pension Schemes) received in February – these returns can only be filed on paper.

There will not be a late filing charge for SA800s (Partnerships) and SA900s (Trusts and Estates), provided that these are filed online by the end of February – the deadline for filing SA800s and SA900s on paper was 31‌‌ ‌October 2021. Customers who file late on paper will be charged a late filing penalty in the normal way, they can appeal against this penalty if they have a reasonable excuse for filing their paper return late

Contributory Benefits Claims For Self Employed Business Owners

Self-employed customers who need to claim certain contributory benefits soon after 31‌‌ ‌January 2022, need to ensure their annual Class 2 National Insurance contributions (NICs) are paid on time – this is to make sure their claims are unaffected. Class 2 NICs are included in the 2020 to 2021 balancing payment that is due to be paid by 31‌‌ ‌January 2022.

Benefit entitlements may be affected if you couldn’t pay your balancing payment by 31‌‌ ‌January 2022, and have entered into a Time to Pay arrangement to pay off the balancing payment and other self assessment tax liabilities through instalments.

Affected customers should contact HMRC on 0300‌‌ ‌200‌‌ ‌3822 for help as soon as possible.

Spreading the cost of your tax

If you do want to enter into a payment plan with HMRC and spread the cost of your tax return payments over a 12 month period, click here.