Self assessment: late tax returns almost double at 1.8 million

3 February 2021: A record-high number of taxpayers missed the self assessment tax return deadline and ICAEW has urged late filers to act well ahead of the new 28 February cut-off.

While more than 10.7 million people submitted their 2019/20 returns by the 31 January deadline, the 1.8 million who failed to file is almost double the 958,296 from last year. 

Remaining taxpayers whose tax return is now late will not be charged a late filing penalty, provided they submit their return online a month later by 28 February.

Reflecting on the figures, ICAEW’s Tax Faculty says the number of missed returns this year confirms that the automatic waiver of late-filing penalties was needed. “The coronavirus pandemic has had a huge impact on the resources of taxpayers, agents and HMRC alike,” says Caroline Miskin, Technical Manager at the faculty. “Waiving penalties for SA returns until 28 February was a welcome move, providing relief for those unable to file due to no fault of their own”.

However, the faculty also reminds taxpayers and agents there have been no changes to payment deadlines and urges those filing returns to do so well ahead of the 28 February deadline.

Interest on late payments 

HMRC warns that those who did not pay their self assessment tax bill by 31 January are now incurring interest on the outstanding balance and should pay their bill as soon as possible.

Taxpayers should pay any outstanding balance, or arrange a payment plan, before 3 March 2021 to avoid a 5% late payment penalty.

Karl Khan, HMRC’s Interim Director General for Customer Services, said: “We won’t send anyone a late filing penalty if they complete their tax return by 28 February.

“We know that many individuals and small businesses are finding it harder to pay this year, due to the pandemic. Anyone who can’t afford to pay their tax bill in full can set up a payment plan, once they’ve filed their return, to spread their tax bill into monthly instalments.”

ICAEW reaction

ICAEW welcomed HMRC’s decision on 25 January to automatically wave penalties for self assessment tax returns filed late due to the coronavirus pandemic for one month. 

Reacting to the announcement Michael Izza, ICAEW Chief Executive, said: “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.”

ICAEW had 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.