HMRC revealed today that out of the 12.2m taxpayers expected to complete a tax return for the 2020/21 tax year, there are still four million outstanding.
Earlier this month HMRC announced that late tax return filing penalties would be waived until the end of February, although this doesn’t stop interest from being applied to outstanding balances from 1 February.
HMRC, therefore, is urging these remaining taxpayers to file and pay outstanding liabilities or set up a payment plan ahead of the deadline.
Myrtle Lloyd, HMRC’s director general for customer services, said: “We know some customers may struggle to meet the Self Assessment deadline on 31 January which is why we have waived penalties for one month, giving them extra time to meet their obligations.
Tax return season spills into February?
However, Kevin Sefton from untied has forecasted that even with the extra month many will still miss the cut-off deadline.
The CEO of the personal tax app commented: “Even with the extra month, we believe that 700,000 people are in line to miss the filing deadline and will receive a £100 fine. HMRC has reported that it gets nearly 1,000 returns a day 14 months after the end of each annual deadline, and sometimes 500 a day 26 months after.”
The number of outstanding tax returns, and the thought of millions taking advantage of the late filing extension into February, will be a bitter pill for accountants to swallow.
Many are hoping to clear tax returns off their to-do list by the 31 January rather than letting the annual busy season continue into February and their practice planning season.
Not telling clients
On AccountingWEB’s Any Answers Live broadcast last week, 75% of viewers said that they are not telling their clients about HMRC’s late filing penalty waiver announcement.
“Everyone wants to get rid of it by the end of January,” said Louise Herrington, the owner of Performance Accountancy and a guest on the Any Answers Live broadcast.
Not having to pay penalties for one month has enabled accountants like Any Answers Live guest Michael Beaver to spend more time on complicated tax cases.
“You always get a complicated case in January that needs time spent on it,” he said on last Monday’s broadcast. “Usually, you have to get through and do what you can in the time you’ve got. Whereas now, you can say, ‘we’re going to park you until February and give it a thorough go through and get it fixed with little consequences’.”
While 31 January is still circled on the calendar as the deadline, HMRC’s self assessment helpline will not open on Saturday 29 or Sunday 30 January and will operate as normal until 6pm on Monday 31 January.
Avoid losing another year
And now, after the past two years of non-stop Covid guidance and support, along with the annual tax return season, accountants are determined not to let self assessment spill over into February and lose another year of planning.
“Last year was the most difficult year we had, and meant that more than 5% of tax returns filed for 2019/20 were after the 1 Feb which means we were working on self assessment well into February and even March,” said Beaver.
“We were also exhausted after that year. We tripped over 31 January, kept working, and sleepwalked into April and it started all over again. We didn’t get the chance to take a step back, take a breather and determine how we wanted 2021 to work, other than we were going to hit the client base hard to make sure all the work was in early. But from a practice management perspective, we had a lost year.”
Stern conversations
Many will then be glad to get rid of this self assessment season. The late filing penalty waiver was welcomed by most of the profession, but it was bittersweet for accountants like Herrington that bunkered down over Christmas and New Year to slash their tax return numbers.
But the biggest headache for many this year was SEISS grants. A lot of accountants have found themselves cast as the bad guys as they’re forced to have stern conversations with clients.
“People get the amounts wrong, get the timing wrong and don’t disclose it to us at all. We get the excuse of ‘I didn’t think it was taxable’ and ‘I thought it was free money’, said Beaver.
Start tax returns earlier
While HMRC statistics show that taxpayers are still leaving tax returns until the last minute, both Beaver and Herrington made a start on their self assessment campaigns earlier than in previous years.
Beaver, for example, started to chase work early in the summer and then again in late summer. By September, clients were told that if they couldn’t get their work in by 31 October, the firm couldn't promise filing their tax returns on time.
“Collectively we decided that last year was enough and we were going to work hard, but unlike last year where we had mandatory overtime Saturday working, we are not going to break ourselves. I wasn’t prepared to put my staff through that. Nine months is enough,” said Beaver.
You can still catch up on the last episode of Any Answers Live with Michael Beaver and Louise Herrington. Then join us on 31 January for a special deadline day episode of Any Answers Live - register to watch the broadcast.
