HMRC suspends late filing tax penalties until 28 February
In an eleventh hour U-turn, HMRC bowed to pressure from professional bodies and waived late filing penalties on tax returns as long as the taxpayer can file their return online by 28 February.
With days left before 31 January, HMRC’s chief executive Jim Harra effectively extended the tax return deadline after conceding that the tax department will not charge late filing penalties for late online tax returns submitted by 28 February.
Harra said this move will “give [taxpayers] the breathing space they need to complete and file their returns, without worrying about receiving a penalty”.
“We want to encourage as many people as possible to file their return on time, so we can calculate their tax bill and help them if they can’t pay it straight away. But we recognise the immense pressure that many people are facing in these unprecedented times and it has become increasingly clear that some people will not be able to file their return by 31 January,” said HMRC’s Harra.
HMRC’s late filing penalties backtrack arrived after more than 8.9m people filed their tax returns, leaving another 3m still to file. While the number is still high, it is on track with the number of tax returns left to file at the same time last year.
In the announcement, Harra said HMRC can “reasonably assume [that] most of these people will have a valid reason for filing late, caused by the pandemic”.
Although HMRC has progressively backed down on tax return late filing penalties over the past month, it is still pushing anyone who hasn’t filed yet to still do so by 31 January. The relaxation of late filing penalties does not affect the payment deadline, which means interest will be charged from 1 February on any outstanding liabilities if taxpayers don’t pay their bills by 31 January.
Nimesh Shah from Blick Rothenberg is still urging self employed individuals to file by 31 January as they “risk being excluded from future government support” and “there could be other consequences in relation to their tax affairs”.
The tax department was previously standing firm on the self assessment deadline, and had rejected pleas from the professional bodies to either extend the deadline or waive late-filing penalties. Although HMRC insisted throughout that it was keeping the situation under review.
HMRC first rejected calls from the professional bodies in December, saying that 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”.
However, Harra did acknowledge that pandemic-related disruption from the taxpayer or the agent would be considered a reasonable excuse. However, Paul Aplin called this another “layer of bureaucracy that will otherwise burden taxpayers, agents and HMRC” in his recent AccountingWEB column urging HMRC to put “pragmatism above process”.
Today’s late filing penalty climb-down is a stark contrast to Harra’s unbudging response to the professional bodies last week, when he insisted there would be no relaxation to the 31 January deadline.
The professional bodies welcomed this news. Glenn Collins, head of policy at ACCA, said that although ACCA asked for a later date, the accountancy body was pleased that “HMRC has listened to the calls for flexibility from accountants”. Collins also asked HMRC to keep the situation under review.
Phil Hall at AAT said: “This decision will help millions of taxpayers and also relieves some of the pressure on an incredibly busy accountancy sector who are doing their utmost to support individual taxpayers and businesses.”
The news didn’t come as a surprise to the CFN’s Kirsty McGregor who predicted on the latest episode of AccountingWEB’s No Accounting for Taste podcast that HMRC will “succumb to pressure at the last minute”.
Commenting after hearing the announcement, McGregor said she was pleased HMRC had “seen sense in the final week before the deadline”. But, she added, “I hope that this pressure hasn’t caused agents too much stress when this announcement could have easily been made months ago.”
AccountingWEB members react
AccountingWEB members were not impressed by the timing of the announcement. “Absolutely ridiculous that they have waited until the last week to announce this, but I have a feeling SEISS4 will bring in the 19/20 numbers but only if they have been filed," said NH.
Meanwhile, Paul Crowley dubbed the concession a “waste of time” and “too late to be a benefit to anyone at all”.
“I thought there was zero chance of us being able to make 31st January, we're actually now in pretty good shape thanks to some tough grafting,” Beaver wrote. “Still, it would have been nice to know this beforehand as I could have actually enjoyed my Christmas rather than working through. But here we are.”
November 2020: The pressure of the coronavirus workload prompts professional bodies and agents to questions the feasibility of the self assessment deadline. Each professional body backs a different approach to easing the impact of the virus from waiving late penalties to extending the deadline.
18 December 2020: In a letter to the professional bodies, HMRC’s chief executive Jim Harra rejects calls to waive late penalties for a short period. However, he acknowledges that pandemic-related disruption will be accepted as a reasonable excuse.
4 January 2020: The prime minister announces a national lockdown after restrictions across the country escalate throughout December.
12 – 15 January 2020: Due to the ‘deteriorating situation’ and filing pressures on agents, the professional bodies again urge HMRC to reconsider relaxing the 31 January deadline and to review the helpline hours and service.
18 January 2020: Responding to the professional bodies, HMRC’s Jim Harra stands firm on the deadline and continues to encourage timely filing. He announces that HMRC is considering ways to make the appeal process as “simple and easy as possible for all concerned”, such as agents being able to submit multiple appeals.
25 January 2020: HMRC announces that there will no self assessment late filing penalties for those who file online by 28 February.