On 6 January, the ATT welcomed an announcement from HMRC regarding an easement for agents and taxpayers experiencing covid-related pressures which were affecting their ability to file 2020/21 self-assessment returns by the normal 31 January 2022 deadline. As last year, HMRC have agreed to a relaxation of penalties for those who are unable to file by the end of this month - as long as they file online by 28 February 2022.

While this easement has been welcomed by many agents struggling with covid-related backlogs affecting them, their clients and indeed HMRC - where there are significant delays in dealing with some correspondence - this is very much not an extension to the January deadline and there are some aspects that anyone considering taking advantage of the easement must consider.

Tax payments

Firstly, the deadline for paying tax is unchanged so tax remains due by 31 January 2022 and interest will be charged from 1 February 2022. However, HMRC have extended the time period to enter a Time-to-Pay (TTP) arrangements for those struggling to pay their tax.

Individuals who are not able to pay on time will not be charged the 5% late payment penalty (which would usually be charged on amounts outstanding from 3 March 2022 onwards) if they pay their tax or set up a payment plan by midnight on 1 April 2022. However, it is not possible to enter a TTP arrangement until the self-assessment return is filed so that still needs to be completed first.

Enquiry window

Any returns filed after 31 January 2022 will be treated as late for the purposes of the enquiry window, which means that this window will be extended for late filers.

Normally the enquiry window would close 12 months after submission of a tax return, but for late- filed returns an additional period is added on, meaning that the enquiry window for returns filed in February 2022 will remain open until 30 April 2023. That will allow HMRC a longer period in which to raise any questions about the return.

Tax credits

Under the usual rules, individuals in receipt of tax credits must finalise their claims for 2020/21 by reporting their income no later than 31 January 2022. HMRC have said that if returns are not filed by 31 January 2022, then claims will be finalised on the basis of the information that HMRC holds at that time but they will use their discretionary powers to re-make decisions provided that claimants supply the necessary information by 28 February. In these cases, we understand that individuals won’t be able to provide final figures online but will need to contact HMRC by phone (0345 300 3900) to finalise their award.

Class 2

Payment of self-assessment liabilities (which include Class 2 charges) after 31 January 2022 can cause issues with the allocations of Class 2 payments and thus entitlements to benefits which depend on a history of payments. Where an individual pays their tax after 31 January 2022 and the balancing payment included Class 2 payments, or they have entered into a Time-to-Pay arrangement they should contact HMRC on 0300 200 3822 to discuss transferring some of their next payment against their Class 2 liability.

Those who are looking to pay Class 2 voluntarily but will not be able to pay until after 31 January 2022, or will not be filing their return until after 31 January 2022, should also contact HMRC, this time on 0300 200 3500 for assistance.