Nearly 1.8m late filers miss tax return deadline
More than 10.7m taxpayers filed their tax returns by 31 January. Yet nearly 15% didn’t make the deadline. This is almost twice the amount reported last year.
On the day after the self assessment deadline, HMRC had received 10,743,387 returns (which includes expected returns, unsolicited returns and late registrations). Another 1.8m are still outstanding.
The majority of the tax returns (95.6%) were submitted online, which inches ahead of the 93% of returns filed this way in 2020.
However, HMRC noted that due to the unusual filing patterns this year, the final figure for 31 January may end up lower as the 392,000 unsolicited returns/late registrations are an estimate based on returns received by early January.
Late filers up on last year
Although the filing rates were on track at the start of the month, the remaining tax returns are up on the 958,296 late filers this time last year. After HMRC’s decision to waive late filing penalty, the 1,790,368 taxpayers who still need to file will not incur an immediate £100 fine as long as they submit their tax return online by 28 February.
HMRC will also not charge late filing penalties for SA700s and SA970s received in February, which can only be filed by paper; and SA800s and SA900s.
While these late filers have some breathing space on the penalty, interest will still be chargeable on any tax not paid by the 31 January due date. HMRC is encouraging these taxpayers to pay an estimated amount as soon as possible to minimise any interest.
A 5% late payment penalty will be charged if tax remains outstanding, and a payment plan has not been set up, before 3 March 2021.
Karl Khan, HMRC’s interim director general for customer services, reiterated that HMRC will not send anyone a late filing penalty as long as they meet the 28 February due date: “We know that many individuals and small businesses are finding it harder to pay this year, due to the pandemic. Anyone who can’t afford to pay their tax bill in full can set up a payment plan, once they’ve filed their return, to spread their tax bill into monthly instalments.”
Last week HMRC’s chief executive Jim Harra waived late penalties after recognising the “immense pressure that many people are facing in these unprecedented times”.
Did the penalty U-turn make any difference?
HMRC’s 11th hour tax penalty U-turn didn’t give practitioners permission to take their foot off the accelerator. By 30 January AccountingWEB readers were swapping tax return war stories as they waited for the latecomers and the “PITA client taking advantage of the moving deadline.”
In a similar story during this week’s Any Answers Live webinar, Accounting Excellence award winner Sian Kelly from Inform Accounting said the announcement was “a little late in the day”, but her firm still aimed to finish on the Friday before the deadline.
“Doing tax returns into February wouldn’t have helped us out, it would have just rejigged the work balance,” she said.
AccountingWEB regular Glenn Martin also didn’t see the announcement as a game changer.
“We have a few tax returns that haven’t turned up yet. We’re assuming that they’re not clients anymore,” said Martin.
“I don’t know why they make these decisions so late. If they made the decision back at Christmas time you could have planned your month better. But just giving you a week or so, it doesn’t really help at all.”
Hardest tax season
With 85% of tax returns filed, practitioners can finally breathe a sigh of relief and say goodbye to what Martin called his “hardest SA season”.
Tax returns weren’t the biggest problem for Martin, it was everything else. “This year from March onwards we’ve been working beyond capacity, had no holidays, recruitment has been difficult, and everything has just been stressed to the limit. You can deal with that for a few months. But when it’s 10 months, it grinds you down.”
He added, “It’s like a lottery when a client calls you. It could be anything.”
Agents suffered further headaches this morning when HMRC systems crashed, leaving some AccountingWEB readers unable to file their last handful of tax returns.
“At least they had the good grace to crash on 1 Feb, not 31 Jan, though that doesn’t help me file my last payroll for January…” said ClaudiaLowe.
How was this year’s self assessment season for you? Have you started drawing up plans for next year? Join our upcoming ‘What would you do differently?’ webinar on 11 February to find out how you can beat those January blues next year.