Accountancy bodies are urging HM Revenue & Customs to delay the deadline for people to file their self-assessment tax returns, claiming that late filing will be commonplace due to the covid-19 pandemic.
Several professional bodies have also warned that economic difficulties caused by the pandemic will make it harder for some people to prepare and file their tax return.
The Institute of Chartered Accountants in England and Wales (ICAEW), the Association of Accounting Technicians (AAT), the Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) are among the professional bodies in discussions with senior officials at HMRC seeking an extension to the deadline.
Jim Harra, HMRC chief executive, has promised to respond to the accountants’ requests this month.
The AAT is pushing for an extension of the January 31 2021 filing deadline and has recommended a delay either to March 31 2021 or to the end of the tax year on April 5 2021.
Phil Hall, AAT head of public affairs, said: “Almost 1 million self-assessment tax returns, of the 11 million due, were filed late in the last financial year. As a result of the coronavirus pandemic, the situation will probably be much worse this year and late filings will rise dramatically.”
Travel restrictions were a complicating factor for individuals who still prefer to meet their accountant in person to complete a return. Mr Hall said some people still arrive at their offices with “12 months of receipts in a plastic bag”.
Given the raft of assistance government has given to mitigate the impact of the pandemic, he added, it did not seem unreasonable to ask “what could be done to reduce the chances of millions of people being landed with at least a £100 late filing penalty”.
The request for an extension comes from taxpayers, who are worried about meeting the deadline, and accountants, who are exhausted after months of deciphering the government’s pandemic rescue packages for individuals and businesses, professional bodies said.
The ICAEW, CIOT and ATT have focused their efforts on persuading HMRC to waive late filing penalties until March. They are concerned that delaying the January 31 deadline would be too complicated, as this would require legislation and create unintended consequences in the tax credit system. Waiving penalties would instead give breathing space to struggling taxpayers and accountants.
“Many member firms are under enormous resource pressure due to assisting clients with claims for covid-19-related financial support and providing other pandemic-related business advice,” the ICAEW said. “While working every hour possible, they will still struggle to meet the filing deadline for all their clients.”
Helen Thornley, ATT technical officer, added: “What we are hopeful of seeing from HMRC is an understanding of the pressures that some agents are under. We would like to hear that adjustments will be made in respect of penalties for late filing where either the taxpayer or their agent are behind due to covid-19 pressures.”
About 11.5 million people are required to fill out a self-assessment tax return and pay any tax due by the January deadline. Last year saw 958,300 returns submitted late. Missing the deadline results in an immediate £100 fine, with the potential for further penalties, unless the taxpayer provides HMRC with a reasonable excuse.
HMRC has already confirmed it will accept the pandemic as a reasonable excuse for failing to file on time, providing that taxpayers clearly explain how they were affected in their grounds for appeal and submit the return as soon as they can.
HMRC said: “We want to encourage as many people as possible to file on time even if they can’t pay their tax straightaway, but where a customer is unable to do so because of the impact of covid-19 we will accept they have a reasonable excuse and cancel penalties, provided they manage to file as soon as possible after that.
“Support is in place for those who may struggle to pay, with customers able to spread their payment liabilities of up to £30,000 over twelve months.”
18th December 2020.