Share this content
HMRC
istock_HMRC_Alphotographic

HMRC waives late filing tax return penalties

by

For the second year running, HMRC is waiving late filing penalties on tax returns for one month as the Covid pandemic continues to wreak havoc on the capacity of agents. 

6th Jan 2022
Share this content

HMRC has announced that self assessment taxpayers will get an extra month to file their tax returns without incurring a fine, although interest will still accrue. 

The news comes as rising Covid cases have squeezed capacity levels of accountancy firms and taxpayers, with self isolation rules and sickness causing strain for many in meeting the 31 January deadline. 

While the waiving of penalties means taxpayers won’t receive a late filing penalty if they file online by 28 February (and payments by 1 April), HMRC is continuing to encourage agents and taxpayers to file before the 31 January deadline as interest will still be payable from 1 February, as usual.

Today’s announcement comes much earlier than the same news last year, when agents were working up until 25 January under the assumption that the 31 January deadline was still intact.

Breathing space for taxpayers

Lucy Frazier, the first permanent secretary to the Treasury, said the late filing penalty waiver will give millions of people “more breathing space to manage their tax affairs” as “Omicron is putting people under pressure.” 

“Waiving late filing and payment penalties will help ease financial burdens and protect livelihoods as we navigate the months ahead,” she added. 

Angela MacDonald, HMRC’s deputy chief executive and second permanent secretary, struck a similar tone: “We know the pressures individuals and businesses are again facing this year, due to the impacts of Covid-19. 

“Our decision to waive penalties for one month for Self Assessment taxpayers will give them extra time to meet their obligations without worrying about receiving a penalty.”

Numbers were tracking similar to last year

The tax authority has revealed that almost 6.5m taxpayers have already filed their tax returns, which leaves around 5.7m still to submit. 

This figure is slightly below the same figure this time last year, when 6.6m had filed their tax return and 5.4m had then until the 31 January to complete theres. While on 31 December 2019, HMRC had received 6.3m tax returns. 

Early signs were that the numbers were tracking at the same levels as previous years. Take Christmas Day for example; this year 2,828 returns were filed, which is ahead of the 2,700 taxpayers that filed on the same day in 2020. Meanwhile, 19,802 returns were filed on Christmas Eve, 8,641 on Boxing Day, 33,467 on New Year’s Eve and 14,231on New Year’s Day. 

Agents called for SA deadline relaxation

However, word started spreading on Any Answers before the New Year that agents were struggling to keep on top of their self assessment workload as the Omicron variant ripped through firms.

AccountingWEB regular Marks first alerted others of the potential self assessment deadline bottleneck as since returning to the office in August many of his staff have been off with Covid or self isolating. 

As of 31 December, he said that his firm had only filed 13% of tax returns, with 18% out with clients, 17% to be reviewed, 6% in progress and 26% not even started. 

Quickly, other readers came forward confessing that they were also buckling up for a tough January. 

Jajo called for an extension of some description, calling the problem this year different to last year’s with the number of days lost to staff with covid or working from home due. 

“With somewhere around 50% of staff with covid or isolating, 31 January deadline is looking difficult. Already had my first staff member saying they came down with Covid on New Year's Day. I doubt they will be the last and working from home won't be helpful in dealing with papers coming in over the next two weeks.”

Still quarantining hand delivered records three days before opening them, AS44NG predicted today’s announcement. “Covid has certainly had an impact on the delivery of information to us, couple that with HMRC's appalling service at the moment and I can only imagine that the government will concede that there are additional obstacles in the way of the usual filing deadline.”

That is not to say everybody was feeling the strain. A chorus of readers echoed similar thoughts to Williams Lester: “A deadline extension gives some clients a new excuse to not bring their paperwork in on time.”

Not quite like 2020

The early announcement of penalty waiver for the 2020/21 is a stark contrast to last year, when HMRC had stood firm on the deadline despite calls from the professional bodies to either extend the deadline or waive late-filing penalties. 

HMRC responded to each call that it was keeping the situation under review, but it wasn’t until seven days before the deadline that HMRC chief executive Jim Harra said that it “has become increasingly clear that some people will not be able to file their return by 31 January” and opted to give taxpayers “the breathing space they need to complete and file their returns”.

Advisers welcome the announcement

Already the news has been welcomed in by many in the profession. Dawn Register, head of tax dispute at BDO, is still encouraging those with tax returns prepared to meet the 31 January deadline but has called the news "a huge relief to those facing tax bills, alongside other household debts in January”.

"HMRC clearly understands that those severely impacted by Covid-19 should not face receiving a ‘brown envelope’ in February as it would result in unnecessary angst.

"This additional time will provide taxpayers and advisers with crucial latitude, which is needed in these unprecedented times. Previously, taxpayers would have needed to rely on adhering to HMRC’s ‘reasonable excuse’, which is open to interpretation – so this new certainty is very timely”.

Replies (40)

Please login or register to join the discussion.

avatar
By Rammstein1
06th Jan 2022 11:40

Great news, it's had an impact on our office!

Thanks (0)
By ireallyshouldknowthisbut
06th Jan 2022 11:49

That's annoyingly early. Some hints for now would have done and a formal announcement w/c 17th would have been more helpful

I was hoping to keep the pressure up on several clients who need to pay, sign off, or send the last couple of bits, this just lets them slide on for another 6 weeks.

Thanks (11)
Should Be Working ... not playing with the car
By should_be_working
06th Jan 2022 12:04

At least they've announced it at the start of the month this time.

There'll be some clients who'll think "Great, the filing deadline's been moved! I'll leave it another month before getting my books in!" but that's their look out.

Technically of course anything filed after 31/1 is still late - will the risk of enquiry still be increased?

Edit: I see the enquiry window will still be extended for post-31/1 returns.

Thanks (1)
avatar
By Paul Crowley
06th Jan 2022 11:53

You beat me to it
AND no late payment penalties if paid before 1 April (or set up a payment plan)

I had an email from SPA

Thanks (0)
avatar
By Paul Crowley
06th Jan 2022 11:55

Dear ASG Members,

Message from Jim Harra

As the Income Tax Self Assessment filing and payment deadline of 31 January draws closer, I know that the latest developments in the COVID pandemic are causing concerns and problems for taxpayers and agents. I therefore wanted to contact you directly following HMRC’s announcement today that we will not charge:

1. late filing penalties for those who file online by 28 February 2022
2. late payment penalties for those who pay the tax due in full or set up a payment plan by 1 April 2022.

This will give SA taxpayers and their representatives additional time if they need it. Your members are once again at the forefront of advice for affected taxpayers, and we know that this, along with likely staff absences in January, will have an impact on their capacity to meet the 31 January deadline.

We think it is reasonable to conclude that significant numbers of taxpayers will have a valid, COVID-related reasonable excuse for filing or paying late, so it is more sensible not to charge the penalties for a short period rather than rely on the usual appeal route.

The waivers will operate in the same way as last year. We are not moving the filing or payment deadline and other self-assessment obligations are unchanged. Interest will be charged as usual from 1 February on outstanding amounts.

I would value your support in getting the message out that taxpayers should file and pay on time where possible, but this easement is there for those experiencing difficulty.

Our Time to Pay options are still available to assist customers. Once they have filed their 2020-21 tax return, customers can set up an online payment plan to spread Self Assessment bills of up to £30,000 over up to 12 monthly instalments.

We expect the extra month will help most people. We do not believe that a longer extension is necessary. By the end of February last year, we had reached broadly the same filing position as we normally reach by the end of January. If customers still cannot file by 28 February or pay (or set up a payment plan) by 1 April, the usual right of appeal against any penalty will be available, with COVID as a possible reasonable excuse.

I very much hope that you will welcome this decision. I am happy for you to share this letter with your members.

Kind regards

Jim Harra
Chief Executive and First Permanent Secretary – HMRC

Thanks (1)
Replying to Paul Crowley:
avatar
By Catherine Newman
06th Jan 2022 12:06

Thanks for sharing Paul. An acknowledgement of our services from none other than Jim Harra!

Thanks (2)
Replying to Paul Crowley:
avatar
By Hugo Fair
06th Jan 2022 14:40

I always search the middle of Jim's missives for the salient point ... and there it is:
"it is more sensible not to charge the penalties for a short period rather than rely on the usual appeal route"

In other words ... this isn't to make life simpler for you or your clients, it's to avoid yet another crop of administration with which HMRC are unable to cope.

Thanks (10)
Replying to Hugo Fair:
avatar
By Paul Crowley
06th Jan 2022 17:44

Agree
Same as last year
Promissed that we could bulk appeal all penalties
What said the IT People? we cannot do that
What said the managers? we are already overwhelmed with paper, and cannot get paper to WFH without a pile of scanning and loads more errors

Result
Stretch a month

Thanks (2)
Replying to Paul Crowley:
avatar
By Hugo Fair
06th Jan 2022 19:17

And that should be your !!!!! 5,000th Thanks !!!!!

Now onwards with the New Year!

Thanks (1)
Replying to Hugo Fair:
avatar
By Paul Crowley
06th Jan 2022 20:21

Spot on
I would have missed the exact number
Much appreciated

Thanks (0)
Replying to Hugo Fair:
By Charlie Carne
07th Jan 2022 14:06

Hugo Fair wrote:

In other words ... this isn't to make life simpler for you or your clients, it's to avoid yet another crop of administration with which HMRC are unable to cope.

That's a very cynical view. Whilst it undoubtedly will save time for HMRC not to have to review and accept a bunch of appeals, it saves the profession even more time in making them. There's plenty to criticise HMRC for, so let's not weaken those arguments by levelling criticism at things we agree with (though I accept that some in the profession have not welcomed this leniency).

Thanks (1)
Replying to charliecarne:
avatar
By Hugo Fair
07th Jan 2022 15:06

Cynical maybe, but only to the extent of joining up the dots in what Jim said.

If you think I'm being *unduly* cynical ... do you think the same announcement would have been made IF the administration of dealing with all those appeals had been a simple automated procedure that caused HMRC no additional effort at their end?

Thanks (2)
Replying to Paul Crowley:
avatar
By johnjenkins
07th Jan 2022 09:33

So Jimbob listens when it suits HMRC but not on QU, which I think has far more professional opposition than a penalty waiver.

Thanks (1)
avatar
By snickersinatwix
06th Jan 2022 11:59

great news, but please don't tell our clients. I want them all to think it is still 31 Jan please.

Thanks (7)
avatar
By Catherine Newman
06th Jan 2022 12:04

All I can say is "wow" having worked like an idiot these last few days.

Thanks (2)
avatar
By justsotax
06th Jan 2022 12:13

On balance its the right thing to do.....not least because clearly the Revenue are not coping well with COVID, and they are already applying hypocrisy at a high level as regards deadlines set for their 'customers' whilst they are unbale to deal with anything within a timescale of any kind.

Thanks (5)
By jon_griffey
06th Jan 2022 12:18

So HMRC recognises that taxpayers and agents struggle to file tax returns within a 10 month window, but under MTD they think we will cope with having to do them at least 4 times a year within 30 days or so.

Thanks (26)
Replying to jon_griffey:
avatar
By snickersinatwix
06th Jan 2022 12:47

Jon they are trying to get rid of us. we are not required. tax is now so simple, the clients can do it all themselves and will no longer need accountants.

The man on the quickbooks advert said so.

Thanks (10)
Replying to snickersinatwix:
avatar
By Eric T
06th Jan 2022 13:50

snickersinatwix wrote:

Jon they are trying to get rid of us. we are not required. tax is now so simple, the clients can do it all themselves and will no longer need accountants.

The man on the quickbooks advert said so.

Yes, you can even do your book-keeping whilst you are skateboarding. Amazing really.

Thanks (2)
Replying to Eric T:
avatar
By Paul Crowley
06th Jan 2022 14:39

Escalators are so passe

Thanks (2)
Replying to Paul Crowley:
the sea otter
By memyself-eye
06th Jan 2022 15:17

so is the Clapham Omnibus....

Thanks (3)
Replying to snickersinatwix:
avatar
By tanyajackson
07th Jan 2022 09:46

QB really p£££es me off. People actually think they can prepare and file their tax return through it. It's so missleading.

Thanks (3)
Replying to tanyajackson:
avatar
By snickersinatwix
07th Jan 2022 09:56

someone asked for accountant recommendations on our local FB community page yesterday. Very happy to see we got lots of mentions, but someone wrote:

"Get quickbooks, that way you wont need an accountant all the time and it keeps the expense low"

I thought it would be inappropriate to respond with the laughing emoji.

I KNOW there are some people out there who are very capable of doing their own accounts and tax returns, and good luck to them, but the idea that everyone can and will do them properly themselves is laughable.

Thanks (3)
Replying to snickersinatwix:
avatar
By tanyajackson
07th Jan 2022 10:48

QB called me in December, the usuall chat about plans for clients to use QB. I politely told her that I have been migrating clients away from it and wouldn't recommend it to anyone. She wasn't too pleased when I told her, why would I recommend a product that devalues my services and makes my life harder. When QB tells its customers that their software can do everything, customer assume that to file their tax return, we just press a button and off it pops to HMRC. They believe that all the bookkeeping is correct because QB tells them so. It takes so much longer to unravel a mess and redo it then just start from scratch.
Honestly can't wait to see what QB comes up with for MTD.

Thanks (0)
Replying to jon_griffey:
avatar
By GHarr497688
06th Jan 2022 12:55

We should all say this to the MTD readiness team....although they will be out shopping or having a wine and cheese lunch. They are a joke.

Thanks (2)
Replying to GHarr497688:
avatar
By Eric T
06th Jan 2022 13:51

GHarr497688 wrote:

We should all say this to the MTD readiness team....although they will be out shopping or having a wine and cheese lunch. They are a joke.

There is an "MTD Readiness Team"?

Thanks (1)
avatar
By GHarr497688
06th Jan 2022 12:54

Thats good I can have some cheese and wine working lunch in January now !!

Thanks (2)
Replying to GHarr497688:
avatar
By johnjenkins
07th Jan 2022 15:35

Don't you anyway????????????????

Thanks (0)
By Michael Beaver
06th Jan 2022 14:56

Last year the extension saved our sanity, although coming too late to save most of it. The earlier announcement is welcome, although we've had a better year with 66% already filed and only 10% of clients yet to deliver their records. In any year this would be good for us, but the extension will save some weekends at any rate, and those last 10% won't annoy me quite so much.

Thanks (3)
avatar
By NotAnAccountant2
06th Jan 2022 16:56

Only tangentially on topic but HMRC are sending out emails with the subject "Your tax return is due" that are actually reminders about the payment deadline. Surely they could have left the word "return" out of the subject.

Thanks (0)
Replying to NotAnAccountant2:
avatar
By Hugo Fair
06th Jan 2022 18:22

Quite.

But you're re-introducing the topic (as per a recent thread) of the seemingly random way in which HMRC - and even legislation - uses a word like 'return'.

Sometimes it's a verb (indicating submission of something but not always the channel/medium for so doing) ... and sometimes it's a noun (indicating a Form but not necessarily whether or not it has been completed).

They might claim that 'tax return is due' meant return of your tax (i.e. payment) is due ... but the reality is that they assume most people file the form and make the payment as a single action - as per the long gone days of putting both in a single brown envelope!

Thanks (2)
Replying to Hugo Fair:
By SteveHa
07th Jan 2022 08:27

Hugo Fair wrote:
... and sometimes it's a noun (indicating a Form but not necessarily whether or not it has been completed).

I've always treated it as a proper noun rather than any old noun, and so will always use Tax Return.

Thanks (1)
Replying to SteveHa:
avatar
By Hugo Fair
07th Jan 2022 11:08

Quite agree ... though I fear you may have flown a mile or two over the heads of any HMRC wordsmith who has got lost and is wandering amongst these threads.

Thanks (1)
avatar
By North East Accountant
07th Jan 2022 10:59

HMRC being nice to agents and taxpayers.....gets me suspicious that there will be bad news to follow.

Like....no spreadsheets for MTD or PAYE for self employed.

Thanks (1)
By Nebs
07th Jan 2022 11:06

Sorry to disagree with everyone, but I think it should have stayed at 31st January. Any clients bringing in paperwork in January should not be surprised to get a £100 penalty, it will concentrate their mind for future years.

Thanks (3)
Replying to Nebs:
avatar
By johnjenkins
07th Jan 2022 12:21

The deadline is 31st January. It's only the penalty that has been waived and that is to do with Covid not if clients get their stuff in on time.
Let's look at the practicalities. Suddenly you have no office staff to do the work as they are isolating - come on, not rocket science.

Thanks (2)
avatar
By Mr J Andrews
07th Jan 2022 14:07

That's buggered up my dry January. As for Harra's comments regarding a month's easement , he's probably thinking of the payback come MTD.

Thanks (0)
avatar
By mikejlee
07th Jan 2022 14:10

In HMRC's Covid notice that came out on 6/1/22, they said at the beginning: "Today HMRC has announced that we will not charge:
1. Late filing penalties for those who file online by 28/2/22."

However further down the notice (para 5 bulletpoint 2) "There is no change to the filing or payment deadline and other obligations are not affected. This means that;
- a return received online in February will be treated as a return received late where there is a valid reasonable excuse for lateness"

This seems to me to be "Double Dutch". A negative missing perhaps? and still a requirement for a reasonable excuse. Have I misread this statement?

Thanks (0)
Replying to mikejlee:
avatar
By Hugo Fair
07th Jan 2022 15:02

It's awful grammar, but yes you've (not surprisingly) mis-read it.

A "return received late where there is a valid reasonable excuse for lateness" (in normal times) means that, although the deadline has been missed, the reasonable excuse will ensure no penalty being raised for the lateness.

So, they are saying that a "return received online in February" will be treated in the same way as if, in normal times, it had contained a 'reasonable excuse' value ... and therefore will not generate a penalty for late filing.

However, as others have pointed out, it will still actually be a late filing (with other potential consequences downstream) AND if the payment is also late (although paid in Feb) it will attract an interest charge.

Thanks (1)
Replying to Hugo Fair:
avatar
By mikejlee
07th Jan 2022 16:20

Many thanks for that. Well pointed out

Thanks (0)