Self-Assessment Late Filing and Payment Penalties Waived for One Month for 2021 Tax Returns

Due to the continuing COVID-19 Pandemic and the recent emergence of the Omicron variant, HM Revenue & Customs (HMRC) will waive late filing and late payment penalties for Self-Assessment taxpayers for one month until 28 February 2022.

The penalty waivers will mean that:

• anyone who cannot file their 2021 Tax Return by 31 January 2022 will not receive a late filing penalty if the Return is filed online by 28 February 2022
• anyone who cannot pay their Self Assessment tax by the 31 January 2022 deadline will not receive a late payment penalty if they pay their tax in full or set up a Time to Pay arrangement by 1 April 2022

Note that the deadline for filing 2021 Tax Returns and paying any tax due remains as 31 January 2022.

This means that:

• although there will be no late filing penalties for any 2021 Returns lodged by 28 February 2022, any such Returns will be treated as being filed late

The enquiry window for these Returns will therefore be extended until 30 April 2023, rather than one year from when the Return was lodged

• Late payment Interest will be payable from 1 February 2022 on any tax due for payment by 31 January 2022

The late payment interest rate is currently 2.75% p.a.

We would therefore recommend that, where possible, all 2021 Tax Returns are lodged by 31 January 2022 and the tax due is paid in full or a time to pay arrangement is set up with HMRC.

A full list of the payment methods is available on the following link:

https://www.gov.uk/pay-self-assessment-tax-bill

Setting Up a Time to Pay Arrangement

The HMRC Time to Pay service gives individuals or businesses the option to spread their tax payments over a period of time.

Self-Assessment taxpayers, who are due to pay up to £30,000 and are able to do this over 12 months, can set up a time to pay arrangement online once their 2021 Tax Return has been lodged.

Taxpayers, who owe more than £30,000 or who need longer than 12 months to pay, may still be able to set up a Time to Pay arrangement by calling the Self-Assessment Payment Helpline on 0300 200 3822.

https://www.gov.uk/difficulties-paying-hmrc/pay-in-instalments

Self-employed Taxpayers Who Need to Claim Certain Contributory Benefits Soon After 31 January 2022

Self-employed taxpayers who need to claim certain contributory benefits soon after 31 January 2022 need to ensure that their annual Class 2 National Insurance contributions (NICs) are paid on time. This is to ensure that their benefits claims are unaffected.

Class 2 NICs are included in the 2020/2021 Balancing Payment of tax that is due to be paid by 31 January 2022.

Benefit entitlements (such as Contributory Employment and Support Allowance, Bereavement Support Payment, New State Pension and Maternity Allowance) may be affected if they:

• could not pay their 2020/2021 Balancing Payment of tax by 31 January 2022
• have entered into a Time to Pay arrangement to pay off the 2020/2021 Balancing Payment of tax and other Self-Assessment tax liabilities by instalments

Affected taxpayers should contact HMRC on 0300 200 3822 for help as soon as possible.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm