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HMRC gives one month’s grace from late filing and payment penalties

HMRC has announced that it will waive late filing and late payment penalties for 2021-21 tax returns submitted before 28th 2022, giving one month’s additional grace to thousands of self-assessment tax payers.

The decision to delay the imposing of penalties for late filing and payments is HMRC’s acknowledgement that the pandemic continues to impact the ability of some taxpayers and agents to meet the 31st January deadline - giving them longer to complete their self-assessment if they need it.

However the tax authorities are still encouraging people to file and pay on time if they can, revealing that of the 12.2 million who need to submit a tax return, almost 6.5 million have done so already.

What do the penalty waivers mean?

The deadline to file and pay tax due under self-assessment remains 31st January 2022, but…

  • Anyone who can’t file their return by the 31st January deadline won’t get a late filing penalty so long as they file by 28th February 2022

  • Anyone who can’t pay by the 31st January 2022 deadline will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement with HMRC, by 1st April.

It is worth noting that interest will still be payable from 1st February, so it is better to file your self-assessment and pay on time if you can!

“Reasonable excuse” guidance

Prior to their announcement of the penalty waivers, HMRC also updated its “reasonable excuse” guidance.

This guidance allows penalties to be avoided where a taxpayer has a reasonable excuse for their failure to meet filing and payment obligations.

“Reasonable excuse” is not defined in law, instead the circumstances of each case are considered individually.

HMRC’s reasonable excuse guidance now states that “the law does not require that a reasonable excuse is based on an unforeseeable or inescapable event”.

Instead, the department now views a reasonable excuse “to be something that stops a person from meeting a tax obligation despite them having taken reasonable care to meet that obligation”.

Even if you believe you have a reasonable excuse, HMRC may not accept it. In this situation you may still be able to request a statutory review or appeal the penalty at tribunal.

Help with your tax return

If you have yet to submit your tax return and need help to prepare it, we can help. You don’t even need to be an existing Square client.

Pop in for a chat at our office on Albert Road, Southsea (opposite O'Neill’s) or give us a call on 02392 835000.

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