On 19 February, HMRC made a welcome announcement that taxpayers who have not yet settled their 2019/20 tax bill will not be charged a 5% late payment penalty provided that they they pay their tax or set up a Time to Pay agreement by 23:59 on 1 April 2021.
Last month, HMRC confirmed that the usual £100 late filing penalty for 2019/20 returns filed after the deadline of 31 January 2021 would be waived - provided that any outstanding returns were filed electronically on or before 28 February 2021. Any return filed after this date will attract the usual £100 filing penalty.
However, taxpayers were still asked to pay their tax by 31 January 2021 with interest on unpaid bills starting to accrue from 1 February 2021. In addition to interest, taxpayers can also be charged late payment penalties. Under the usual rules, a 5% surcharge is added to any amounts unpaid by 3 March 2021 – which did not allow those filing at the end of February much time to get their tax bill settled. The ATT therefore very much welcomes the announcement that, for 2019/20, HMRC are delaying the imposition of this penalty and are giving taxpayers until midnight on 1 April 2021 to either pay their 2019/20 bill or agree a Time to Pay arrangement.
The deadlines that self-assessment taxpayers therefore need to keep in mind are:
- 28 February 2021 –2019/20 tax returns must be filed on or before this date to avoid late filing penalties
- 1 April 2021 – taxpayers must settle any outstanding 2019/20 tax or agree a payment plan on or before this date to avoid a 5% surcharge on any unpaid tax.
Time to pay arrangements
Agreeing a Time to Pay plan with HMRC allows taxpayers to spread their 31 January 2021 bill over the next 12 months. However, in order to apply for a Time to Pay agreement a taxpayer must get their self-assessment tax return in to HMRC first. It is not possible to apply to HMRC for a Time to Pay arrangement until the relevant return has been filed and it is known how much tax is due.
Those with less than £30,000 of tax still outstanding under self-assessment (including any amounts deferred from 31 July 2020) should be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months. Anyone who cannot use the online service, can use HMRC’s Time to Pay Self-Assessment Helpline on 0300 200 3822 to agree a payment plan instead. This document provides a helpful guide to the kind of information HMRC will ask for on the call.