Last year HMRC extended the filing deadline for 2020/21 tax returns, meaning anyone who did not file their tax return by the 31 January 2022 deadline did not receive a late filing penalty providing they filed online by 28 February 2022.
This was all due to the additional pressure that Covid-19 put on the taxpayers and their agents. However, there is no such extension available this year for 2021/22 tax returns and these are due to be filed by the normal deadline of 31 January 2023.
If the return is submitted late, the agents can appeal against penalties using normal appeal channels if they believe they have reasonable excuse. There is no bulk agent appeal facility to appeal for more than one return this year. HMRC’s website lists what may count as a reasonable excuse:
A reasonable excuse is something that stopped you meeting a tax obligation that you took reasonable care to meet, for example:
- your partner or another close relative died shortly before the tax return or payment deadline
- you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
- you had a serious or life-threatening illness
- your computer or software failed just before or while you were preparing your online return
- service issues with HMRC online services
- a fire, flood or theft prevented you from completing your tax return
- postal delays that you could not have predicted
- delays related to a disability or mental illness you have
- you were unaware of or misunderstood your legal obligation
- you relied on someone else to send your return, and they did not.
You must send your return or payment as soon as possible after your reasonable excuse is resolved.
ACCA published an article explaining how the new points-based penalty regime works.
Late-payment penalties and interest
Anyone who pays the self-assessment tax they owe by the 31 January deadline will not be liable for a late-payment penalty provided they pay their tax in full, or set up a Time to Pay arrangement, by 31 January.
It would be advisable if the taxpayer is intending to benefit from the time to pay arrangement facility that the tax return is submitted in good time, to avoid last- minute delays.
Interest will be charged from 1 February on any outstanding liabilities. It should be noted that late-payment interest rates have recently been increased by HMRC.
Currently HMRC interest rates are set in legislation and are linked to the Bank of England base rate. There are two rates:
- late-payment interest, set at base rate plus 2.5%
- repayment interest, set at base rate minus 1%, with a lower limit of 0.5% (known as the ‘minimum floor’).
Help with payment problems
Taxpayers who are struggling to pay the tax they owe can set up a payment plan with HMRC using the Time to Pay service on the government website. Customers with bills over £30,000, or who need longer than 12 months to pay their bill, should call HMRC on 0300 200 3822.
Taxpayers can contact HMRC via webchat, Twitter, or the self-assessment phone helpline (0300 200 3310). They can also find the information they need via the free HMRC app or their personal tax account.
Further resources
Read our In Practice articles:
HMRC information and inspection powers
Self-assessment tax returns for landlords
Tax guides to assist your clients