Late Self Assessment 2021: Covid judged ‘reasonable excuse’ for late returns

HMRC will accept Covid-19 as a reasonable excuse for a taxpayer making a late self assessment in 2021, as long as they explain how they were affected in their grounds for appeal and submit the return as soon as they can.

Pandemic related personal or business disruption, whether to a taxpayer or their agent, might very well constitute a reasonable excuse for a late self assessment in 2021, the tax authority stated.

late self assessment 2021 - woman stressed at computer

Figures published by HMRC at the beginning of January indicated that around half of an anticipated 11m taxpayers had already filed their self assessment forms, meaning at least another five million returns are expected before the end of January.

HMRC says they want to encourage as many people as possible to file on time even if they can’t pay their tax straight away.

However, where a taxpayer is unable to do so because of the impact of Covid-19, HMRC will accept they have a reasonable excuse and cancel penalties, provided they manage to file as soon as possible after that.

HMRC also says that there is support in place for those taxpayers who may struggle to pay as they may be able to spread payments over 12 months.

‘Time To Pay’ Arrangements

HMRC has enhanced ‘Time to Pay’ arrangements so that taxpayers who have filed a self assessment return and determined the amount of tax due for 2019/20 and the amount of any payments on account for 2020/21 will be able to make payments over an extended period.

The automated self-serve Time to Pay online service has been changed to enable self- assessment liabilities of up to £30,000 to be paid, in up to 12 instalments.

This service enables the taxpayer to set up an instalment arrangement online without having to contact HMRC beforehand. However, Time to Pay arrangements are only available once the return has been filed. 

HMRC said that if taxpayers or their agents are struggling to obtain the required information in time for their self- assessment return to be submitted by the 31 January filing date, they can provide provisional figures on their return and then provide HMRC with the actual figures as soon as they can. They must state that provisional figures are being provided by ticking the appropriate data item box on the return.  

The penalty appeal period has been extended to three months, and HMRC has indicated it is looking into potential changes to make appeals easier and quicker for taxpayers, agents and HMRC.

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