Accounting industry groups wrote a joint letter to HMRC urging the tax office to relax the deadline for people to file their upcoming self-assessment returns, arguing that the economic hardship caused by the Coronavirus pandemic will make it difficult for people to submit and pay their tax on time.
The letter, sent by the Association of Accounting Technicians (AAT), the Institute of Chartered Accountants in England and Wales (ICAEW), the Chartered Institution of Taxation (CIOT), the Institute of Chartered Accountants of Scotland (ICAS) and the Association of Chartered Certified Accountants (ACCA), also called for the late penalty fee to be waived for a short period.
However, HMRC’s Chief Executive Jim Harra responded to the letter and rejected the group’s calls for easing the deadline and waiving the late filing fees, saying it would “complicate” things.
In his letter, seen by Contractor Weekly, Harra said HMRC want to “encourage” people to complete their tax returns by 31 January 2021, “even if they can’t pay in full”, and “do not want to complicate this message by sending a blanket signal that it’s okay to file late.”
He explained: “That could have some serious disadvantages for our customers; de-coupling the payment and filing dates might confuse customers, and even lead to non-payment, interest accruing, and late payment penalties being triggered.”
Around one million self-employed people missed the 31 January deadline in 2020, according to a survey by TaxScouts. This year, the cost of deferring taxes could spiral as nearly a third (27%) said the pandemic had made them more likely to delay filing their returns.
HMRC have acknowledged that COVID-19 will have had an impact on some accountants and their clients when it comes to doing their self-assessment.
Therefore, Harra said they “will not penalise people who need more time” and will “accept a pandemic-related personal or business disruption as a reasonable excuse.”
“If their return is late due to pandemic-related delay on the part of an agent, this will also be a valid reasonable excuse,” he added.
The taxman will also extend the penalty appeal period to three months for anyone who receives a penalty notice.
Harra concluded his letter by saying: “I know you will be disappointed that our decision is not what you and many of your members wanted.
“I understand and sympathise with the extreme pressures your members have been under in this exceptional year: they have helped deliver the economic response to the pandemic, helping UK businesses get the support they need while at the same time suffering the effects of the pandemic on their own firms. I am very grateful to them for their valuable and vital work.”
Richard Wild, head of tax technical at the CIOT, said in response: “We are disappointed that HMRC did not waive the late filing penalties until 1 March like we called for. However, we understand why that is – filing rates are currently holding up and they would need a real business case to justify such changes which currently isn’t apparent.
“We will continue to be in discussions with them on this matter in January as we know that many taxpayers and their advisers have been significantly impacted by the pandemic.”
If you can’t pay your self-assessment tax return on time, please visit the government website for more information.