Tax return penalties – good news for those struggling to get the return done by 31/1/22

Kirsty Young Freelancers, Personal Tax, Tax

If you have to complete a 2020/21 tax return, the standard deadline to submit your return is 31st January 2022.

As this date is coming up quick, you should be well on your way to completing it if you haven’t done so already!

However, if you are struggling to do it, we do have some good news for you.


More time from HMRC

HM Revenue & Customs have recognised that due to Coronavirus challenges, many taxpayers won’t have sorted this out yet. In addition, many accountancy firms have had their own issues with COVID related illness.

As a result, HMRC have said that they will not issue the usual automatic penalty for those people who don’t submit their tax return by the 31/1/22. Instead they will give tax payers to the 28th February 2022 to submit their return.


When is a deadline not a deadline?

Whilst this is good news, there is still a sting in the tail. As the deadline ‘technically’ hasn’t changed, you will still need to pay your tax by 31st January 2022 to avoid getting late payment charges and interest.

If you have an idea of what tax is due (for example you have calculated it manually!), it is possible to pay HMRC anyway without submitting your tax return. Just use your ‘UTR’ (Unique Tax Reference) as a payment reference.

If you cannot pay, you can contact HMRC to make a ‘time to pay arrangement’.


SEISS grants and deferred/delayed payments

If you took advantage of some of the COVID grants and concessions available last tax year, these need to be accounted for and paid for too.

For example, if you are self-employed and benefitted from a SEISS grant, tax may be due on that grant amount as if it were normal income. So, your tax bill might be more than you expect in a ‘normal’ year, just as the amount paid last year might have been lower.

Even if you haven’t quite finished your accounts yet, your accountant should be able to help you sort out what you owe based on:

  • last year’s tax return
  • tax you may have paid upfront for this year

Again, if you cannot pay, you can contact HMRC to make a ‘time to pay arrangement’.


Need help with your tax return?

If you don’t have an accountant, are not happy with your current accountant, or concerned they can’t cope with the workload, we’d love a chat about how we can help. We have a team of over 20 accountants and many clients in various business sectors, so chances are we’ve dealt with people like you, and businesses like yours too.