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HMRC to waive SA late filing penalties for one month

25 January 2021: ICAEW welcomes HMRC’s decision to automatically wave penalties for self assessment tax returns filed late due to the coronavirus pandemic. The move will see no penalties issued for returns filed online up to 28 February 2021.

HMRC has today (25 January) confirmed that it will automatically waive late-filing penalties for self assessment (SA) tax returns due on 31 January 2021 for one month.

The announcement has been welcomed by ICAEW which has been urging HMRC to make such a move since November 2020 in light of the impact of restrictions and coronavirus cases on the resources of taxpayers, agents and HMRC itself.

Reacting to the announcement Michael Izza, ICAEW Chief Executive, said: “We are pleased that HMRC has acted on our calls for an automatic one-month waiver of penalties for late filing. This is good news for hard-pressed businesses and their agents, many of whom are struggling to meet the filing deadline because of the impact of COVID-19. This decision will make a real difference and we are grateful to HMRC for their flexibility.”

The one-month waiver, which HMRC's CEO confirmed in a letter to ICAEW and other professional bodies, will come as a great relief to agents and taxpayers facing difficulties in getting the data required to complete returns in time for the 31 January filing deadline.

ICAEW’s Tax Faculty also reminds agents that for those unable to complete returns by the end of February, that the impacts of coronavirus will remain grounds to appeal against a late penalty on the grounds of “reasonable excuse”.

The waiver of late-filing penalties does not change the need to pay any tax due by 31 January. If payment isn’t received by 1 February 2021, then interest will apply from that date and a late payment penalty of 5% will also apply if by 2 March the tax isn’t paid or there isn’t a time-to-pay agreement in place.

The faculty also highlights that late filing may have wider implications for self-employed individuals considering making a Self-employed Income Support Scheme claim from 1 February. The government is yet to confirm eligibility criteria for the fourth grant period, which is expected to run from 1 February to 30 April. However, the new criteria might include a cut-off date for filing 2019/20 tax returns to enable grant calculations to be made based upon the latest data.