The group has also advised that any tax owed for 2019/20 should be paid, or a payment plan set up, on or before 1 April 2021 to avoid a late payment penalty.
HMRC announced last month that if taxpayers were “unable” to file their 2019/20 tax return online by the deadline of 31 January 2021, they would “not receive” a £100 late filing penalty provided they file online by 28 February 2021.
LITRG revealed that nearly 1.8 million taxpayers missed the 31 January 2021 deadline, which is almost double the number for the previous year. These taxpayers reportedly now only have until midnight this Sunday (28 February 2021) to take advantage of the relaxation from HMRC.
However the group stated that the due date for the tax “remains unchanged” meaning that interest could still accrue for 2019/20 tax paid after 31 January 2021. In addition, a 5% late “payment penalty” would normally be charged for amounts still outstanding on 3 March (that is, more than 30 days late).
The group has suggested that taxpayers can avoid this penalty if, before it is charged, the amounts due are included in a “time-to-pay arrangement”. But concerns have risen that taxpayers who waited until 28 February 2021 to file their returns would then only have “two further days” to avoid the 5% penalty for late payment.
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 2021, we strongly suggest you get your tax return submitted as soon as possible. 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 2021.
“We welcome HMRC’s latest relaxation of the late payment penalty, especially given our concerns about the ability of some taxpayers to set up a time-to-pay arrangement before the penalty would have applied. But we now have non-statutory relaxations on both late filing and late payment penalty regimes, both of which have been announced at relatively short notice.”