January is the month for paying your taxes and for filing electronically any 2020 Self Assessment Tax Returns that have not already been filed in paper format by the end of last October. As we have seen in the past, the excuses for failing to file your Tax Return on time are few and far between.
That said, as at the time of writing, HMRC do now consider that the effects of COVID-19 may give rise to a reasonable excuse against a penalty. You will, however, need to explain how Covid-19 delayed the filing of your Tax Return or any payment and demonstrate that you took every effort to bring matters up to date once the reason for the excuse has ended.
HMRC now cite the following that may count as a reasonable excuse in addition to their usual list:
If you are suffering from a serious or life-threatening illness;
Having an unexpected stay in hospital that prevented you from dealing with your affairs;
The death of a partner or close relative shortly before the filing or payment deadline; and
Postal delays that the taxpayer could not have predicted.
Reliance on others is not usually an acceptable excuse but may be considered as such on an individual basis in the current pandemic.
If you have insufficient funds to make your payment, HMRC are now looking to you making contact to agree “time to pay” arrangements, especially after the Collector of Taxes announced the deferral of the July 2020 instalment for those adversely affected by the first lockdown at the start of the pandemic. Certainly talking to the Collector will help mitigate any penalties arising from non-payment.
The pandemic is affecting everybody in lots of different ways. Whilst HMRC have granted various reliefs to defer self-assessment payments, you do still need to file your Returns and settle any amounts due. If you are in difficulty, talking to HMRC sooner rather than later can only assist your position compared to putting it off indefinitely.
Above all, however, be safe and be sensible.
If you want more information on this article, please contact Robin Beadle.