With continuing pressure on the public and tax agents due to COVID-19, HMRC have agreed to waive any penalties due on late submission of tax returns until 28th of February 2022.
Whilst the deadline for submitting your 5th of April 2021 Tax Return technically still remains the 31st of January 2022, HMRC will waive all fines for late submission until the 28th of February, providing the public an extra month to make a submission without facing any late filing penalties.
There are a number of factors in play here, with COVID-19 being the main culprit, but also the added layer complexity of reporting the various support schemes and grants received during the pandemic have made it more difficult for sole-traders to accurately report their income, with HMRC quick to send out assessments to those whose SEISS income entries do not match their own records.
So, what exactly are the terms of this waiver?
- HMRC’s filing deadline remains 31st of January 2022, but they will not issue late filing penalties to those who file no later than 28th of February 2022.
- The payment deadline remains 31st of January 2022. This is unaffected by the change, and HMRC will charge interest as usual on late payment of tax at a rate of 2.75% from the 1st of February.
- Self-assessment tax bills must be paid in full by the 1st of April 2022, or a time to pay arrangement put in place with HMRC by this date to avoid any late payment penalties. This is in favour of the usual penalty levied after 30 days of 5% of any tax due for non-payment.
As the waiver only applies to penalties, not interest charged, it is still advisable to try and make your submission by the 31st of January 2022 to avoid any late payment interest, with HMRC insisting in their announcement of the penalty waiver that the submission deadline has not changed.
A tax return filed in February will be treated as a return filed late and must have a reasonable excuse in place for why it is late, and as usual with late tax returns, an extended enquiry window will also apply should HMRC have any questions about the contents of your return. As such, late filing should only be treated as a last resort and not a blanket extension to the deadline.