Time is running out to avoid fines for late tax returns
Release: Immediate: Monday 21 February 2022
The Low Incomes Tax Reform Group (LITRG) is reminding taxpayers that they have only a week to file their 2020/21 tax return online to avoid an automatic £100 late filing penalty. LITRG also highlights that any tax owed for 2020/21 should be paid, or a payment plan set up, on or before 1 April 2022 to avoid a late payment penalty.1
Last month HMRC said that if taxpayers were unable to file their 2020/21 tax return online by the deadline of 31 January 2022, they would not receive a £100 late filing penalty provided they file online by 28 February 2022.2 The announcement follows a similar relaxation which was announced last year for 2019/20 tax returns.3
Despite calls from LITRG and HMRC, among others, for taxpayers to still file by 31 January if they can, nearly 2.3 million taxpayers missed the 31 January 2022 deadline – an increase of half a million on the previous year.4 These taxpayers must file by midnight next Monday night to take advantage of the relaxation from HMRC.
The due date for any outstanding tax, National Insurance or student loan repayments remained unchanged, meaning interest still accrues for 2020/21 tax paid after 31 January 2022. Today, the rate of late payment interest increased to three per cent from 2.75 per cent. But LITRG points out that taxpayers can avoid the usual 30-day late payment penalty if the amounts due are either paid or included in a time-to-pay arrangement on or before 1 April 2022.5
Victoria Todd, Head of LITRG, said:
“If you have not filed your tax return yet, even if there is no tax due or you are able to settle the amount you owe on or before 1 April 2022, we strongly suggest you get your tax return submitted now. Not only is interest accruing on any outstanding tax but leaving it until the last minute risks a late filing penalty if something unforeseen happens to prevent you from filing on or before 28 February 2022. Depending on the facts, you may not be successful at appealing any penalty if you had no good reason for missing the statutory filing date of 31 January 2022.
“Filing your tax return is also necessary if you wish to set up a payment plan with HMRC. The sooner the tax return is filed, the more time you will have to agree a payment plan without incurring a penalty if you anticipate that you cannot pay your tax liability in full by 1 April 2022.”
Notes for editors
1. The penalty does not apply to the first payment on account for 2021/22, which was also due on 31 January 2022.
2. See https://www.litrg.org.uk/latest-news/news/220112-get-your-tax-return-done-31-january-if-you-can
4. https://www.gov.uk/government/news/more-than-102-million-filed-their-self-assessment-by-31-january and https://www.gov.uk/government/news/107-million-tax-returns-filed-by-31-january-deadline
5. If any of the income tax, Class 2 and Class 4 National Insurance contributions or student loan repayments for 2020/21 which were due on 31 January 2022 are still outstanding on 3 March 2022, a penalty would usually apply equal to five per cent of the amount which is outstanding. See https://www.litrg.org.uk/tax-guides/tax-basics/enquiries-penalties-appeals-complaints-and-debt/tax-penalties#toc-late-payment-penalties for more information.
See https://www.litrg.org.uk/tax-guides/tax-basics/what-if-i-cannot-pay-my-tax-bill#toc-what-is-a-time-to-pay-arrangement- for more information on time-to-pay arrangements. Interest is still payable on amounts paid late under such an arrangement. In most cases time-to-pay arrangements can be set up online without needing to call HMRC.
6. Low Incomes Tax Reform Group
The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.
The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.