Covid-19 may be a “reasonable excuse” for late filing

Covid-19 will be accepted as a “reasonable excuse” for missing the deadline for returning a self-assessment tax return, it has been revealed.

However, the taxpayer must be able to explain how they were affected in their grounds for appealing a late filing penalty. They must also submit the return as soon as they can.

The guidance comes as figures reveal that HMRC had received 6.6 million tax returns on January 4 – slightly above half those due to be filed by the January 31 deadline.

According to reports, pandemic related personal or business disruption, whether to a taxpayer or their agent, might very well constitute a reasonable excuse.

A HMRC spokesperson said: ‘We want to encourage as many people as possible to file on time even if they can’t pay their tax straight away.

“But where a customer is unable to do so because of the impact of Covid-19 we will accept they have a reasonable excuse and cancel penalties, provided they manage to file as soon as possible after that.

“Support is in place for those who may struggle to pay with customers able to spread their payment liabilities of up to £30,000 over 12 months.”

If taxpayers or their agents are struggling to obtain the required information in time to meet the January 31 deadline, they can provide provisional figures on their return and then provide HMRC with the actual figures as soon as they can.

However, they must state that provisional figures are being provided by ticking the appropriate data item box on the return.

In other moves, the penalty appeal period has been extended to three months, and the taxman is considering potential changes to make appeals easier and quicker, according to reports.

HMRC is also allowing more people more flexibility to pay their personal self-assessment tax bills in light of the continuing pandemic.

The taxman has increased the threshold for paying tax liabilities to £30,000 to help ease any potential financial burden people may be experiencing.

Self assessment taxpayers can also apply online for additional support to help spread the cost of their bill into monthly payments, without the need to call HMRC.

The online payment plan service was already being used to set up instalment arrangements for paying tax liabilities up to £10,000 – that has now risen to £30,000.

People who need longer than 12 months to settle their tax liabilities are being advised to contact HMRC in the usual way.

HMRC has also estimated that around 95 per cent of self assessment taxpayers due to make payments on January 31 could qualify for a Time to Pay arrangement using the online self-serve facility, without speaking to one of its advisors.

People looking to set up their own self-serve Time to Pay arrangements must meet the following requirements:

They must have no:

• outstanding tax returns
• other tax debts
• other HMRC payment plans set up

The debt needs to be between £32 and £30,000 and the payment plan needs to be set up no later than 60 days after the due date of a debt.

Customers using self-serve Time to Pay will be required to pay any interest on the tax owed. Interest will be applied to any outstanding balance from February 1, 2021.

WNJ is here to provide help, advice and support to all our clients during this difficult period. Please get in touch with any issues you may be facing.