HMRC has finally provided an extension to the 31 January 2021 filing deadline for 2019/20 tax returns. HMRC will not levy the £100 late filing penalty, providing tax returns are now filed by 28 February 2021.
However, interest will still begin to accrue on any tax liability which has not been paid by 31 January 2021. Any time to pay arrangement to spread any tax due over the following 12 months cannot be agreed until the tax return has been filed (see further details below).
We would, therefore, recommend that taxpayers still try to complete and file their returns by 31 January 2021, wherever possible.
Time to pay arrangements
Due to the ongoing coronavirus pandemic, enhanced support has been put in place to help taxpayers defer their payment of tax which is due on 31 January 2021.
A deferral had already been provided for the second payment on account for the 2019/20 tax year, due on 31 July 2020, until 31 January 2021. This can now be further deferred along with any balancing payment for 2019/20 and the first payment on account for 2020/21.
The enhanced arrangement will enable you to spread tax liabilities of between £32 and £30,000 over 12 (or less) monthly instalments. HMRC has set up an online facility to request this time to pay arrangement but note that you will need a Government Gateway account set up to access this service.
In order to be eligible to apply for the enhanced time to pay arrangement, you must have filed your 2019/20 tax return and have no other outstanding tax returns or tax debts. The arrangement needs to be set up no later than 60 days from the due date (i.e. by 1 April 2021) although, as mentioned above, we would recommend setting this up by 31 January 2021, where possible. Interest will be charged on the deferred liability commencing from 1 February 2021, although late payment penalties will not be levied.
If you cannot use the online service, owe more than £30,000, or, if you require longer than 12 months to repay your debt, then the online facility will not be available. You can, however, call the self-assessment payment helpline on 0300 200 3822 to discuss an alternative time to pay arrangement.
If you need any further assistance on the above please do not hesitate to get in touch.