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Further details on the SA penalty waiver


Published: 28 Jan 2021 Updated: 02 Feb 2021 Update History

ICAEW’s Tax Faculty answers questions that have arisen on the one-month waiver of late-filing penalties for 2019/20 self assessment tax returns and warns of possible pitfalls.

While HMRC’s announcement of a one-month waiver of late filing penalties on 25 January has been welcomed by members, some have asked for clarification of specific points.

No change to the legal deadline: implications

Importantly, the legal deadline for filing 2019/20 tax returns has not changed. HMRC has announced that it will assume that anyone who files their 2019/20 tax return online by 28 February 2021 has reasonable excuse for late filing and it will not issue penalty notices in these cases, avoiding the need for appeals. 

However, the filing deadline remains 31 January 2021 (or such later date indicated on a late notice to file) for the purposes of HMRC enquiries and for daily and six- and 12-month late filing penalties in due course. The deadline for many claims and elections for the 2018/19 tax year is 31 January 2021 and that date is unchanged.

No change to the payment deadline: implications

The 31 January 2021 deadline for paying tax has not changed. Interest at 2.6% will start to accrue from 1 February 2021 on self assessment liabilities that were due on 31 January 2021. Taxpayers may wish to consider paying an estimated amount to minimise interest charges.

HMRC is offering enhanced time to pay arrangements for those that cannot afford to pay, but the tax return must be filed before the arrangement can be set up and interest is still charged on outstanding amounts.

Although the online time to pay system will remain open for 60 days following the 31 January (to 1 April), a 5% late payment penalty will be charged on any 2019/20 tax which is not paid, or in a time to pay arrangement, on or before 2 March 2021. 

Late payment penalties are poorly understood and may catch people out; these penalties barely get a mention on gov.uk and the Tax Faculty has asked HMRC to address this and issue appropriate communications.

Paper returns due on 31 October

The automatic waiver of late filing penalties does not generally apply to paper returns, which were usually due to be filed by 31 October 2020. Taxpayers may still have grounds to appeal penalties on the basis that they had reasonable excuse for late filing but will need to make the appeal rather than have the penalty waived automatically. £10 daily penalties will be charged for paper tax returns filed on or after 1 February 2021. 

Particular returns and circumstances

The waiver applies as follows to some particular cases: 

  • SA100 online filing exclusions
    Paper returns should be clearly marked on the front as exclusion cases and be accompanied by an appeal form. This process should continue to be followed during February and ICAEW expects HMRC to accept the appeal.
  • SA700 non-resident companies return (cannot be filed online) 
    Penalties will be automatically waived if return filed on paper by 28 February 2021
  • SA800 partnership return
    Penalties will be automatically waived if return filed online by 28 February 2021 
  • SA900 trust and estates return
    Penalties will be automatically waived if return filed online by 28 February 2021
  • SA970 trustees of registered pension schemes return (cannot be filed online)
    Penalties will be automatically waived if return filed on paper by 28 February 2021 

Eligibility for SEISS 4 grants

The announcement on the eligibility criteria for the fourth self-employment income support (SEISS) grant will be made in the Spring Budget on 3 March 2021. 

It is possible, but unknown at this stage, that the grant calculations may include information from 2019/20 returns. If this does happen there will be a cut-off date by which the 2019/20 return would need to be filed. The Tax Faculty expects that this to be either 28 February or 3 March 2021, but cannot rule out that the cut-off date might be 31January 2021, especially for those who started self-employment in 2019/20. 

The cautious approach would be to file 2019/20 returns for those who expect to claim the fourth SEISS grant by 31 January 2021.

Expat employees: qualifying special mixed fund accounts nomination

Where taxpayers were unable to file their self assessment returns by 31 January 2021, HMRC has confirmed it is able to allow nominations of qualifying special mixed fund accounts (s809RB(8)(b) ITA 2007) within those returns if they are made on or before 28 February 2021.

Tax Faculty

This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

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  • Update History
    02 Feb 2021 (12: 00 AM GMT)
    Inserted the section "Expat employees: qualifying mixed fund accounts nomination".