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Tax penalties: coronavirus ‘relaxations’

Updated on 26 January 2021

Coronavirus guidance

To help people through the coronavirus pandemic, HMRC have announced various changes in the way they deal with penalties. We outline these below.

Illustration of a man cowering in front of a tax penalty notice
(c) Shutterstock / VectorMine

Penalties for filing 2018/19 tax returns late – what changes have HMRC made?

Self Assessment tax returns for the year to 5 April 2019, the 2018/19 tax year, were normally due to be filed by 31 January 2020 (if filing online; paper returns were due by 31 October 2019).

HMRC can charge you penalties if you are late filing your tax return – some of them are issued automatically (such as a £100 initial penalty), but for others, HMRC must decide to charge you the penalty.

This is where there is some good news. HMRC have said that they will ‘not charge individuals and businesses daily penalties where someone has been late in filing their 2018/19 Self Assessment Tax Return’. They say that ‘this is in recognition of the exceptionally difficult circumstances many taxpayers have faced due to the impact of the COVID-19 pandemic, during the period when the daily penalties accrued’.

However, other penalties will continue to apply – it is only the daily penalties that HMRC will not charge.

Can I appeal against penalties?

Yes. You can appeal against a decision made by HMRC, which includes a penalty they have sent you. Our main guidance (see link below) explains more about penalties and appeals.

Due to the pandemic, HMRC might be a bit more lenient with penalties than they normally would. They might agree to cancel penalties if you can show that you have been affected by coronavirus and this meant you had a ‘reasonable excuse’ for failing to meet a tax obligation.

As noted on GOV.UK, you will need to ‘explain how you were affected by coronavirus in your appeal’.

Also, you normally only have 30 days to appeal an HMRC tax decision. However, from 1 February 2020, HMRC are allowing an extra three months to appeal, as explained on GOV.UK. It is not clear how long this extension will last, so you should aim to make any appeal as soon as you can.

If HMRC do not cancel the penalty when you appeal to them, you can ask for them to review their decision again and/or you can appeal to an independent tribunal.

Will I still have to file my 2019/20 tax return on time?

The normal legal deadline for filing your 2019/20 tax return online is 31 January 2021.

If you file your tax return on paper, the normal deadline was 31 October 2020.

If HMRC sent you a notice to file a 2019/20 tax return after 1 September 2020, the submission deadline is different, as explained in our main guidance.

However, on 25 January 2021 HMRC said that they would not charge late-filing penalties for 2019/20 returns submitted online on or before 28 February 2021. We cover this announcement in a separate news article. The purpose of the relaxation is to ensure that those who have a reasonable excuse not to file their return by the 31 January 2021 deadline because of the pandemic do not need to appeal the automatic £100 late-filing penalty which would otherwise be issued.

If you are in a position to file your return online before 31 January 2021, you should continue to do so for the reasons explained in the article referenced above.

What if coronavirus or other problems mean I am late filing my 2019/20 tax return? 

As above, you should still try to send in your tax return by the deadline.

But if, for example, you were to get ill in January and were unable to file your 2019/20 by 31 January 2021, you might have a reasonable excuse.

If this is the case, you must send the tax return in as soon as you can – that is, as soon as you are well enough to do so.

As discussed above, HMRC have announced that they will not charge late-filing penalties until 1 March 2021 for 2019/20 returns submitted online. Therefore, if you are able to submit the return on or before 28 February 2021, HMRC will not issue you with a late-filing penalty and you will not need to appeal it.

If you continue to not be able to file your return beyond 28 February 2021 and you have a reasonable excuse for doing so, you should then appeal against any penalties saying why you could not make the deadline. Note, however, that the circumstances giving rise to a reasonable excuse must have existed prior to the usual 31 January 2021 deadline, otherwise you will not have valid grounds to appeal.

Where can I find out more?

Read our main guidance on tax penalties and tax appeals for more general information.

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