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Press release: Time is running out to avoid fines for late tax returns

Published on 22 February 2021

The Low Incomes Tax Reform Group (LITRG) is reminding taxpayers that they have only days to file their 2019/20 tax return online and avoid an automatic £100 late filing penalty. LITRG also advises that any tax owed for 2019/20 should be paid, or a payment plan set up, on or before 1 April 2021 to avoid a late payment penalty.1

Illustration of a press release on a computer

HMRC announced last month that if taxpayers were unable to file their 2019/20 tax return online by the deadline of 31 January 2021, they would not receive a £100 late filing penalty provided they file online by 28 February 2021.2 Nearly 1.8 million taxpayers missed the 31 January 2021 deadline, which is almost double the number for the previous year.3 These taxpayers must file by midnight this Sunday night to take advantage of the relaxation from HMRC.

But the due date for the tax remains unchanged. This means interest still accrues for 2019/20 tax paid after 31 January 2021. In addition, a five per cent late payment penalty would normally be charged for amounts still outstanding on 3 March (that is, more than 30 days late). Taxpayers can avoid this penalty if, before it is charged, the amounts due are included in a time-to-pay arrangement.4 But following concerns that taxpayers who waited until 28 February 2021 to file their returns would then only have two further days to avoid a five per cent penalty for late payment, HMRC have now announced 30 days’ grace before this penalty is charged.

It means, for example, that Self Assessment taxpayers who file their 2019/20 tax return online on or before 28 February, and pay their tax on or before 1 April 2021, will not incur any penalties for late filing or late payment. But Interest is still payable on all late-paid amounts, currently at 2.6 per cent per annum.

Victoria Todd, Head of LITRG, said: 

“If you have not filed your tax return yet, even if there is no tax due or you are able to settle the amount you owe on or before 1 April 2021, we strongly suggest you get your tax return submitted as soon as possible. Not only is interest accruing on any outstanding tax but leaving it until the last minute risks a late filing penalty if something unforeseen happens to prevent you from filing on or before 28 February 2021. Depending on the facts, you may not be successful at appealing any penalty if you had no good reason for missing the statutory filing date of 31 January 2021.

“We welcome HMRC’s latest relaxation of the late payment penalty, especially given our concerns about the ability of some taxpayers to set up a time-to-pay arrangement before the penalty would have applied. But we now have non-statutory relaxations on both late filing and late payment penalty regimes, both of which have been announced at relatively short notice. Coupled with the different dates for each type of penalty and the different rules for interest, these shifting sands create a complex landscape for unrepresented taxpayers to navigate. We encourage HMRC to think ahead around any further changes to avoid any unnecessary taxpayer anxiety and confusion.”

Notes for editors

1. See https://www.gov.uk/government/news/more-help-for-self-assessment-taxpayers.

If any of the income tax, Class 2 and Class 4 National Insurance contributions or student loan repayments for 2019/20 which were due on 31 January 2021 are still outstanding on 3 March 2021, a penalty would usually apply equal to 5% of the amount which is outstanding. See https://www.litrg.org.uk/tax-guides/tax-basics/enquiries-penalties-appeals-complaints-and-debt/tax-penalties#toc-late-payment-penalties for more information.

The penalty does not apply to the first payment on account for 2020/21, which is also due on 31 January 2021.

2. https://www.gov.uk/government/news/no-self-assessment-late-filing-penalty-for-those-who-file-online-by-28-february

3. HMRC statistics show that 1,790,368 taxpayers (14.74% of returns expected) missed the 31 January 2021 deadline, compared with 958,296 (8.18% of returns expected) the year before. See https://www.gov.uk/government/news/107-million-tax-returns-filed-by-31-january-deadline and https://www.gov.uk/government/news/record-breaking-104-million-customers-filed-online.

4. See https://www.litrg.org.uk/tax-guides/tax-basics/what-if-i-cannot-pay-my-tax-bill#toc-what-is-a-time-to-pay-arrangement- for more information. Interest is still payable on amounts paid late under a time-to-pay arrangement.

5. Low Incomes Tax Reform Group

The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.  

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk


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