Muras Matters: Self-Assessment Late Payment Penalties and VAT Deferral Scheme Opens


Although HM Revenue & Customs (“HMRC”) have previously announced that penalties for the late filing of Self-Assessment tax returns for the 2019/20 tax year will not be imposed until 28 February 2021 tax payments still remain due by 31 January 2021. As a result interest is charged on any late payments and a further 5% late payment penalty would ordinarily be added to any tax still unpaid 30 days after the due date.

Last week however HMRC announced that taxpayers under Self-Assessment will not be charged the initial 5% late payment penalty provided that their tax is either paid in full, or they make a Time to Pay arrangement, by 1 April 2021.

In addition this week will see the opening date for businesses to be able to access the online VAT deferral new payment scheme detailed in Muras Matters on 14 December 2020. Businesses who deferred paying VAT due in the period 20 March to 30 June 2020 and cannot afford to pay by 31 March 2021 can join the deferral scheme from 23 February 2021.


Self-Assessment Late Payment Penalties

The payment deadline for Self-Assessment tax liabilities for 2020/21 tax year was the 31 January 2021 and interest will be charged from 1 February 2021 on any amounts outstanding.

However, HMRC are now providing taxpayers with more time to pay or set up a payment plan in order to avoid the 5% late payment penalty which otherwise will be applied to any outstanding tax on 2 March 2021. Any outstanding tax must be paid in full or else a payment plan set up by midnight on 1 April 2021.

A payment plan can be set up online to spread the cost of a taxpayers Self-Assessment bill using HMRC’s  self-serve Time to Pay facility if:

–      You owe £30,000 or less;

–      Your tax returns are up to date;

–      You do not have any other payment plans or other outstanding tax with HMRC.

If you are not eligible for a payment plan or cannot use the online service then you can call the Self-Assessment payment helpline on 0300 200 3822.

VAT deferral new payment scheme

Those businesses that deferred paying VAT due for the period from 20 March 2020 to 30 June 2020, and who cannot afford to pay the deferred VAT by 31 March 2021, can join the VAT deferral new payment scheme to enable them to pay their deferred VAT over a longer period.

The online service for this scheme will open tomorrow, 23 February 2021, and close on 21 June 2021. The scheme will enable businesses to make up to 11 interest free monthly instalments.  For those businesses who may wish to utilize this service then it is important to join the scheme as soon as possible in order to maximise the months available for spreading payments across.

Businesses can join the scheme online and further information can be found at on the GOV.UK website (join new scheme for deferral of vat payments due to coronavirus). It should be noted that businesses must set up the payment scheme themselves as HMRC do not offer an agent service for the scheme.

Business that need additional time to pay their deferred VAT should contact HMRC as soon as possible.

Our Current working arrangement – We remain ‘Open for business’

Our office premises are currently closed, however our staff are continuing to collect post, and are working from home as much as possible. They can still be contacted in the usual way either via email or by calling the office number where reception will divert your call to the appropriate staff member.

If you have any questions regarding the payment of your self-assessment tax bill or the VAT deferral new payment scheme, please speak to your usual contact at the firm.

To see our other news items please visit our Muras Baker Jones – Blog.