HMRC rejects calls to relax tax return deadline
HMRC will not waive late filing penalties or extend the 31 January deadline, but it will accept pandemic related disruptions and agent delays as a reasonable excuse and will also extend the period to appeal a penalty.
HMRC’s chief executive Jim Harra rejected requests from the ACCA, CIOT, AAT, ICAEW and ICAS to ease the self assessment deadline due the Covid workload pressures accountants are under.
Responding to the joint letter from the accountancy bodies, HMRC’s Harra said their proposal to waive late filing penalties for a short period after 31 January would “complicate” HMRC’s self assessment message and would “send a blanket signal that it is OK to file late”.
Harra explained that this could have some “serious disadvantages” for taxpayers. “De-coupling the payment and filing dates might confuse customers, and even lead to non-payment, interest accruing, and late payments being triggered.”
He added that it would also encourage some taxpayers to file late when they don’t need to.
Instead, HMRC wants as many taxpayers as possible to complete their returns by the self assessment deadline, “even if they can’t pay in full”.
Harra explained that “filing their return is key to crystalising their SA liability and being able to get our support, if they need it, to pay their tax”.
No penalties for late filing caused by Covid delays
However, HMRC has acknowledged some taxpayers and agents will not be able to file on time due to the impact of the coronavirus.
The HMRC chief executive said that these taxpayers should get their returns in as soon as they can but they will not be penalised if they need more time.
While HMRC will not issue a blanket waiver of late filing penalties, it will accept pandemic-related disruption caused to the taxpayer’s business or their personal circumstances as a reasonable excuse. The same applies when agents are delayed in filing a return due to the pandemic and this will also be treated as a valid reasonable excuse.
Extend late filing appeal
These taxpayers will receive a penalty notice, but Harra said that those affected or their agent can get the late filing penalties “cancelled easily” by contacting HMRC.
HMRC will extend the appeal period from one to three months to give taxpayers and agents more time.
Harra signed off the letter by expressing his gratitude for the “valuable and vital work” the accountancy profession has undertaken during the pandemic.
“I understand and sympathise with the extreme pressures your members have been under in this exceptional year: they have helped deliver the economic response to the pandemic to the suffering effects of the pandemic on their own firms.”
HMRC could also be reluctant to change course and offer concession as Harra pointed out that at the present "filing rates are holding up".
How to mitigate the impact the coronavirus on self assessment season has been an ongoing debate within the accountancy profession. The majority of the accountancy bodies have pressurised HMRC to waive late filing penalties until March, although the AAT also backed the idea of extending the deadline to either March 31 2021 or to April 5 2021.
Although the approaches differ, the accountancy bodies are in agreement that the pandemic has put firms and agents under enormous pressure. As ICAS chief executive Bruce Cartwright outlined in his letter to HMRC: “Accountancy and tax agent firms are operating under great stress and are the unsung heroes of implementing the CJRS and SEISS and for enabling the Chancellor’s schemes to keep many employees and businesses going in these extraordinary times.”
However, the AccountingWEB community has been split throughout the deadline debate. When AccountingWEB polled its users last month 44% backed the calls to drop late filing penalties, while 47% supported a deadline extension, and 9% voted for the current rules.
Backing the idea of concencessions to the self assessment deadline, AccountingWEB reader JoniBarnes said: “It's normally last minute to get a lot of the returns filed for me. This year we are behind with our workload due to Covid - mainly furlough related work taking up a lot of time.”
While AccountingWEB regular Jon Griffey argued against HMRC intervention: “If they do suspend the late filing penalties, or extend the deadline then they need to announce it at the very last minute otherwise clients will simply sit back and take advantage of the new deadline, by which time it will be 5 April when we will be busy again.”