The number of people who failed to submit a self assessment tax return by the statutory deadline has shot up, nearly doubling at 1.8m or almost 15% of those due to file
More than 10.7m people submitted their 2019/20 returns by 31 January deadline, compared with an expected total of 12.1m self assessment returns due.
However, 1,790,368 taxpayers missed the deadline (14.74%). This is almost double the number who failed to do so last year (958,000) and well above 2019’s total of 730,000.
Individuals whose tax return is now late will not be charged a late filing penalty provided they submit their return online by 28 February, as one of the concessions HMRC has made in response to Covid-19 disruption.
Those who did not pay their self assessment tax bill by 31 January are now incurring interest on the outstanding balance and should pay their bill as soon as possible.
HMRC says they should pay any outstanding balance, or arrange a payment plan, before 3 March to avoid a 5% late payment penalty.
Those who are not yet able to file their tax return should pay an estimated amount as soon as possible, which will minimise any interest and late payment penalty.
Karl Khan, HMRC’s interim director general for customer services, said: ‘We won’t send anyone a late filing penalty if they complete their tax return by 28 February.
‘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.’
Taxpayers can set up a payment plan, in up to 12 monthly instalments, online via gov.uk, provided they have no outstanding tax returns, other tax debts, or other HMRC payment plans set up.
The debt needs to be between £32 and £30,000, and the payment plan needs to be set up no later than 60 days after the due date for payment. Interest accrues on all outstanding balances, including those in payment plans.
A return received online in February will be treated as a return received late where there is a valid reasonable excuse for the lateness. This means that:
- there will be an extended enquiry window;
- for returns filed after 28 February the other late filing penalties (daily penalties from 3 months, 6 and 12 month penalties) will operate as usual;
- the payment deadline remains 31 January and interest will be charged on late payment. The current rate of late payment interest is 2.6%;
- 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. Further late payment penalties are charged at 6 and 12 months, on tax outstanding where a payment plan has not been set up.
Self assessment taxpayers who are required to make payments on account, and know their 2020/21 tax bill is going to be lower than in 2019/20 – for example, due to loss of earnings because of Covid-19, can reduce the amount they are required to pay via an online reporting tool.
Dawn Register, head of tax dispute resolution at BDO, said: ‘Whilst HMRC delayed imposing late filing penalties for online returns, it is key to remember that the payment deadline remains unchanged, so interest will still begin to accrue from 1 February if personal taxes were not paid by 11.59pm on 31 January unless the person agreed to pay by instalments.
‘If you missed the 31 January filing deadline and have cash flow issues, do not bury your head in the sand. HMRC will need to know what payments are due before agreeing a time to pay arrangement, which means that you must file your return first.
'Penalties may be imposed if returns are not filed online this month. The key message is that for people who missed 31 January filing they really should try to file in February and before the next penalty deadline of 28 February.’