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5% Surcharge on 1 or 2 March 2020?

When Does Late Payment SA 5% Surcharge Kick In? 1 or 2 March 2020?

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Client had massive 2018/19 tax bill to pay on 31 January 2020. He can only raise sufficient funds to pay on Monday 2 March 2020.

I reckon that HMRC will charge 5% on this because 2 March 2020 seems to be a day (or two) too late. (31 January 2020 plus 30 days = 1 March 2020). Do you agree.

Is the 5% surchage triggered at midnight of the 29th day or midnight of the 30th day.

Can a payment by bank transfer reach HMRC on Saturday 29 February 2020. Client is cutting it too finely.

Do Sunday bank transfers reach HMRC on the same Sunday.

Would a time to pay arrangement get around this. If so, is this a job for the client or accountant to do the telephone call.

Have noticed recently that HMRC treating tax payments as made later than they did do years ago.

Replies (25)

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By Not Anonymous
25th Feb 2020 20:46

An arrangement, sorted beforehand, should do the trick

https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam61380

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By Not Anonymous
25th Feb 2020 21:00

Duplicate post

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RLI
By lionofludesch
26th Feb 2020 06:31

As the 30th day falls on a Sunday, I would suggest that, in practice, the deadline may fall on Friday. Who knows? It's all very unclear.

I don't understand why bank computers apparently need weekends and bank holidays to put their feet up. Why isn't banking a 24/7 service?

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Replying to lionofludesch:
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By SXGuy
26th Feb 2020 07:36

Something which has always annoyed me about banks. Had an argument with Woolwich years ago because a standing order bounced on a Sunday even though they admitted paying in funds wouldn't clear on a Sunday. So happy to charge you but not willing to take your money.

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Replying to SXGuy:
ALISK
By atleastisoundknowledgable...
26th Feb 2020 08:11

A Standing Order was paid out on a Sunday??

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ALISK
By atleastisoundknowledgable...
26th Feb 2020 08:12

Time To Pay - client you call.

As far as I’m aware, they don’t let agents make the calls anymore - they realised a few years ago that we knew the right words so that the computer would say yes.

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By whitevanman
26th Feb 2020 10:14

I thought the time limit was 28 days not 30. Also the legislation is couched in terms of tax unpaid more than 28 days after the due date, so the charge would arise at any time after midnight on the 28th day (that means on 29 Feb this year).

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Replying to whitevanman:
Quack
By Constantly Confused
26th Feb 2020 10:25

whitevanman wrote:

I thought the time limit was 28 days not 30. Also the legislation is couched in terms of tax unpaid more than 28 days after the due date, so the charge would arise at any time after midnight on the 28th day (that means on 29 Feb this year).

The late payment penalty is 30 days after due; I read somewhere HMRC had suggested it would remain the same date as for non-leap years (presumably the 2nd) but no-one seemed willing to risk that that was the case (or could show anything in writing to confirm HMRC had actually said it).

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Replying to whitevanman:
RLI
By lionofludesch
26th Feb 2020 10:32

whitevanman wrote:

I thought the time limit was 28 days not 30.

You're right - it was.

But it changed - for no apparent reason - a few years ago. Presumably to confuse people in leap years.

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By paulwakefield1
26th Feb 2020 13:05

FWIW, Nichola Ross Martin shows in an example that the 5% penalty is not payable until midnight 2 March.

https://www.rossmartin.co.uk/penalties-a-compliance/721-tax-penalties-se...

However it would be worth checking with her that the leap year was indeed taken into account.

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Replying to paulwakefield1:
RLI
By lionofludesch
26th Feb 2020 13:19

Aye, I think we're all agreed that, in a common year, the deadline is 12 pm on 2nd March.

The questions are......

* is there a concession for a leap year ? and

* what happens when the deadline falls on a non-banking day ?

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Replying to lionofludesch:
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By paulwakefield1
26th Feb 2020 14:26

Yes -but Nichola's article is very specifically addressed to this year i.e. 2 March 2020. So I imagine she has established that there is a concession or what you will.

OTOH it may be an oversight so best to check.

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Replying to paulwakefield1:
RLI
By lionofludesch
26th Feb 2020 14:36

paulwakefield1 wrote:

OTOH it may be an oversight so best to check.

Mmmmm - I'd just like her to say whether she's updated it for the leap year.

There are replies on there that are elderly. Whilst it says it was updated on 29th Jan 2020, that doesn't mean it was rewritten then.

I've told all mine to pay by Friday. Just to be on the safe side.

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Replying to lionofludesch:
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By paulwakefield1
26th Feb 2020 16:35

Can't disagree with that!

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Replying to lionofludesch:
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By paulwakefield1
26th Feb 2020 16:36

Another duplicate!

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Replying to lionofludesch:
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By paulwakefield1
26th Feb 2020 14:27

Duplicate

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By whitevanman
26th Feb 2020 14:49

Late payment penalty, as opposed to the old "surcharge" is due on the "penalty" date. That in turn is the day after the date specified in the table in the Act, which for present purposes is the 30 day period. So, tax due 31 January, date given by Act is 1 March (this year) and the penalty date is therefore 2 March. If the tax is unpaid on that date the 5% penalty applies. If payment cannot be made, it is essential to contact HMRC before that date to arrange time to pay (failing which penalty will be charged).
See the HMRC Self Assessment Legal Framework manual at SALF308A.

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Replying to whitevanman:
By penelope pitstop
26th Feb 2020 15:04

Thanks.

Taking account of the 29 days in this February for the leap year, I think what you have said is that 31 January 2020 plus 30 days = 1 March 2020.
So, payment has to be made on 1 March 2020 at the latest.

If payment reaches HMRC on 2 March 2020 (i.e. after midnight on 1 March 2020) then there will be a 5% surcharge.

It appears that the 5% penalty charge is not levied if payment is made on the 30th day; only if made AFTER the 30th day.

That is unless someone begs to differ.

I will get client to ring HMRC for a time to pay arrangement. It will be rather healthy for this particular client to have to grovel to HMRC!!

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Replying to penelope pitstop:
RLI
By lionofludesch
26th Feb 2020 15:17

penelope pitstop wrote:

It appears that the 5% penalty charge is not levied if payment is made on the 30th day; only if made AFTER the 30th day.

Yes, you've 30 days to pay. Not 29 and a bit.

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Replying to Justin Bryant:
By penelope pitstop
26th Feb 2020 18:41

Thanks for that link.

ICAEW say the "trigger Date" is 1 March 2020 (Sunday).

Assume that "trigger" means that payment has to be made on that date to avoid penalty charge.

"Trigger" could also have referred to 2 March 2020, meaning that if payment is received on or after that date a penalty will be triggered.

Some ambiguity with the use of the word "trigger".

Shame that such a simple issue as that I have raised takes so long to get to the bottom of. Much of the problem is caused by their being "extraneous Internet information overload"

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Replying to penelope pitstop:
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By Justin Bryant
27th Feb 2020 09:58

Yes; paying the annual huge subscriptions you'd expect better, clearer wording (an example even), but it's reasonably clear from "The penalty can be avoided if a time to pay arrangement is in place by the trigger date" that only if the payment arrives after the trigger date will there be a 5% tax geared penalty (I think!).

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By whitevanman
27th Feb 2020 10:27

Generally speaking, confusion arises because the person writing an article decides (s)he will introduce a new term instead of simply using the one in statute and doesn't go on to explain how the new term fits with the legislation.

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Replying to whitevanman:
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By Justin Bryant
02nd Mar 2020 16:25
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Replying to Justin Bryant:
By penelope pitstop
02nd Mar 2020 14:37

Well spotted.

So, one ought not be be "TRIGGER-happy" about the use of "substitute language for the statutory wording."

And HMRC ought to have made it crystal-clear at exactly what point in time a payment would have been classed as late for the 5% penalty purpose.

Particularly on a leap year!

Closely followed by the professional institutes!!

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