Published: 09:34, 28 January 2021
| Updated: 09:37, 28 January 2021
Those buoyed by news this week the deadline for self-assessment tax returns has been extended need to be careful not to still fall foul of late payments to HMRC.
According to accounts and business advisors Kreston Reeves, HMRC still expects taxes to be paid by the traditional January 31 deadline - despite saying returns filed before February 28 will not be hit with a £100 late filing penalty.
The government extended the deadline due to the impact of the pandemic.
Laurence Parry, a partner in the tax team at the firm, which has offices in Canterbury, Chatham and Sandwich, explained: "The announcement by HMRC to extend the deadline is welcome but will continue to present considerable challenges for taxpayers. If a tax return has not yet been completed it is unlikely that the exact amount of tax due will be known, yet HMRC still requires tax due to be paid by January 31.
“Individuals in this position should look to make a payment on account to HMRC estimating the amount of tax they or their advisers believe due. If an overpayment is made it can be reclaimed. If an underpayment is made, the interest charges will be significantly less than if no payment had been made at all.
“For those who really cannot make payment, HMRC will consider a time to pay arrangement. This must, be agreed before February 28 otherwise a 5% surcharge will kick in. Interest will still be chargeable.
“Questions will undoubtedly be asked as to why the payment date could not also be pushed back to February 28.
"Government budgeting focuses around the January 31 tax receipts and at a time when spending is at an all-time high, changing that window is likely to have caused considerable challenges.”