Gary Heynes

Written by: Gary Heynes

Gary Heynes

Partner, Head of Private Client

No amnesty from HMRC on 31 January tax return deadline

Many business owners, employees and investors have endured almost a year of uncertainties as they have navigated the pandemic. Government schemes have thankfully eased some of the pressures.

One area where HMRC refuses to be moved though is on extending the 31 January filing deadline for 2020 tax returns. Companies, many with teams of people, have been given a three-month extension to their normal accounts filing deadline and the possibility of an extension on the tax return filing deadline. However, individual taxpayers, with no accounts team, who have to personally collate information from a number of sources while also navigating business, their employees and other uncertainties, are being given no leeway on the 31 January 2021 filing deadline.

A number of accounting and tax professional bodies wrote to HMRC, asking for penalties for late filing be waived until the end of March 2021. HMRC replied on 18 December 2020, giving two key justifications for declining a blanket waiver. First, if taxpayers file their returns, their tax liability will then be known and, if they can’t afford to pay, then assistance (for example under Time-to-Pay arrangements) can be given. Second, if the delay in filing is due to the impact of the pandemic, then they can apply to have the penalty reversed under the “reasonable excuse” provisions.

Our experience does not accord with either of these justifications. On the first point, clients do want to complete their tax returns but with their focus on critical matters over the past few months, and with the onus of collating personal tax information falling mostly on them individually, they have simply not been able to give their tax returns the necessary priority.

On the second point, two key problems remain. First, what will be considered a coronavirus impact? Second, there are additional costs involved for many to appeal against a penalty and liaise with HMRC to have this reversed. A coronavirus impact could be very clear and directly impact the taxpayer, but other indirect factors impacting on their ability to collect information or prepare the return could also have arisen. Who will decide what will be permissible as a reasonable excuse, and will HRMC even have the time to look at each case?

HMRC notes a further concern that taxpayers who are unaffected will take advantage of any blanket waiver. This is not borne out by the 2020 experience. When given the option, those who were able to pay their tax at the end of July 2020 did so, even though they could have deferred payment. We expect the same to apply to those who have the information to file their tax returns before the 31 January 2021 deadline.

As we start another period of national lockdown, with all the uncertainties that will bring for taxpayers, we do hope that HMRC will reconsider its approach and provide more certainty for taxpayers by extending the 31 January 2021 filing deadline for those who need it. 

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