Self-Assessment penalties – further update

13 Jan 2022

Further to the announcement on 6 January regarding Self-Assessment penalties, HMRC have provided the following supplementary information.

1. Tax Credits customers

Customers are still encouraged to make their declarations by 31 January; if that is not possible tax credits will be finalised on the basis of the information HMRC holds at the time; if a declaration is made after that, and by 28 February, HMRC will use its discretionary powers to re-make the decision if the delay was due to Covid. HMRC will not be expecting customers to prove the delay was due to Covid.  

2. Class 2 NICs

Mandatory payment

Self-employed taxpayers who need to claim certain contributory benefits soon after 31 January 2022 need to ensure their annual Class 2 National Insurance Contributions (NICs) are paid on time. This is to make sure their claims are unaffected. Class 2 NICs are included in the 2020/21 Balancing Payment that is due to be paid by 31 January 2022. Benefit entitlements may be affected if they:

  1. Can’t pay their Balancing Payment by 31 January 2022, and
  2. Enter into a Time to Pay arrangement to pay off the Balancing Payment and other Self-Assessment tax liabilities through instalments.

Affected taxpayers should contact HMRC on 0300 200 3822 for help as soon as possible. 

Voluntary payment

It is too late to make the necessary changes to the system.  HMRC will ensure that gov.uk is updated to advise customers of the issue and the action they need to take.  HMRC have prepared the message below for the Agent Update and will also post lines on the Agent Forum.  Unfortunately, HMRC are unable to directly contact affected customers before 31 January as they cannot identify them until they have filed and paid their return.  Like last year, HMRC will also take steps to identify, and contact affected customers after 28 February.

The following taxpayers will need to contact HMRC on 0300 200 3500 for assistance:

  • Self- employed customers who have profits below £6475 in the 2020/21 tax year and want to pay voluntary Class 2 NICs for Contributory Benefit after 31 January 2022, or
  • Those who have paid voluntary Class 2 NICs via Self-Assessment before 31 January 2022 but will not file their return until after 31 January

3. Does the payment easement also apply to SA700 (Non-resident Company Income Tax Return), SA800 (Partnership Tax Return), SA900 (Trust and Estate Tax Return) and SA970 (Tax Return for Trustees of Registered Pension Schemes) customers too?

Yes. The deadline for submitting and paying for these Self-Assessment customers is also 31 January 2022.  The late payment penalty easement is based on a payment date of 31 January and not the type of Self-Assessment return. 

4. Daily late filing penalties reminders

Last year, due to a technical issue, HMRC did not issue the usual daily late filing penalties reminders in June and July.  HMRC plans to issue the reminders this year.  There is, of course, a warning about the daily penalties on the initial late filing penalty notice.

5. Can Covid be a reasonable excuse where there is agent delay and will HMRC provide guidance on that?

If a taxpayer has taken all reasonable steps to get their affairs in order, to allow their agent to meet the filing deadline, and that agent has been delayed due to COVID, then the agent delay may constitute a reasonable excuse. 

HMRC are considering whether updates to guidance are necessary, together with other easements, such as the bulk appeals process, as the situation develops.

6. Partnership returns SA800S 

Individual partners will not be charged a late filing penalty in respect of a 2020/21 partnership return (SA800) provided that the partnership return is filed online on or before 28 February.

7. Deadline for nominating accounts for the special mixed fund rules

We can confirm that for 2022, the deadline for nominations of special mixed funds has been moved to 28 February.

8. Overpaid Self Employment Income Support Scheme (SEISS) grants

If you have not yet told HMRC about overpaid SEISS grants you must declare those received from 6 April 2020 to 5 April 2021 on your 2020/21 tax return. If you submit your return by 28 February 2022, instead of 31 January 2022, you will not be charged a penalty unless there is a deliberate failure to tell HMRC about a SEISS grant overpayment. More information about penalties for failure to notify SEISS grants is available in HMRC’s factsheet CC/FS11a.

If you have any questions in relation to the above please email us at technical@ciot.org.uk.