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HMRC Self Assessment Penalty Waivers

Please read below the update received from HMRC on Thursday 6 January 2022

As the Income Tax Self Assessment filing and payment deadline of 31 January draws closer, HMRC know that the latest developments in the COVID pandemic are causing concerns and problems for taxpayers and agents. HMRC therefore advised CIMA that following HMRC’s announcement today, they will not charge:

  1. Late filing penalties for those who file online by 28 February 2022 
  2. Late payment penalties for those who pay the tax due in full or set up a payment plan by 1 April 2022. 

This will give SA taxpayers and their representatives additional time if they need it. CIMA members are once again at the forefront of advice for affected taxpayers, and HMRC know that this, along with likely staff absences in January, will have an impact on their capacity to meet the 31 January deadline.  

HMRC think it is reasonable to conclude that significant numbers of taxpayers will have a valid, COVID-related reasonable excuse for filing or paying late, so it is more sensible not to charge the penalties for a short period rather than rely on the usual appeal route.

The waivers will operate in the same way as last year. HMRC are not moving the filing or payment deadline and other self-assessment obligations are unchanged. Interest will be charged as usual from 1 February on outstanding amounts.

The Time to Pay options are still available to assist customers.  Once they have filed their 2020-21 tax return, customers can set up an online payment plan to spread Self Assessment bills of up to £30,000 over up to 12 monthly instalments.   

HMRC expect the extra month will help most people. They do not believe that a longer extension is necessary. By the end of February last year, hMRC had reached broadly the same filing position they normally reach by the end of January.  If customers still cannot file by 28 February or pay (or set up a payment plan) by 1 April, the usual right of appeal against any penalty will be available, with COVID as a possible reasonable excuse.