Time to Pay in 2021

With the challenges of 2020 in the rear view mirror of so many businesses, but still posing financial burdens, it is helpful to know that there is some leeway this year when it comes to paying HMRC. Let's take a look at what's on offer on terms of time to pay and filing deadline extensions.

Self-Assessment Tax Returns

If you are self-employed or in a partnership, you'll know your key date to file your Self-Assessment tax return and pay any tax due for the 2019/2020 period, plus any payment on account due for 2021/2021, is 31 January 2021. But what if you are struggling to pay because your business has been adversely affected by the COVID-19 pandemic, or you are unable to meet the filing deadline due to coronavirus related reasons?

Unable to file on time?

HMRC has said that if coronavirus has affected anyone who is required to file a Self-Assessment tax return by 31 January 2021, either in their personal or business life, than it will accept that as a 'reasonable excuse' for missing the filing deadline.

Quite what HMRC will deem as a 'reasonable excuse' is the subject of discussion, as they have not set down specific rules, instead stating that they will deal with everyone on a case by case basis. Generally, reasonable excuses for failure to file by the deadline include hospital stays, serious illnesses and bereavement.

HMRC has said, "We want to encourage as many people as possible to file on time even if they can't pay their tax straight away, but where a customer is unable to do so because of the impact of COVID-19 we will accept they have a reasonable excuse and cancel penalties, provided they manage to file as soon as possible after that."

This appears to mean that penalties will be applied for late filing, which can later be appealed. Thankfully, the appeals period has been extended, and HMRC has promised to make the process easier.

Unable to pay on time?

HMRC has confirmed that it will not be waiving late payment penalties.

If you cannot pay your Self-Assessment tax because of reasons directly related to COVID-19, then you may be able to pay in monthly instalments. This includes any deferred payments on account that were due in July 2020 if these were not paid at the time.

You do not need to contact HMRC if you decide to set up a payment plan to spread the cost of your latest Self-Assessment tax bill.

Instead you can do this online, but only if:

  • You owe £30,000 or less
  • You do not have any other payment plans or debts with HMRC
  • Your tax returns are up to date
  • It is less than 60 days after the payment deadline

If you cannot use the online service, or if you do not meet the criteria for a payment plan, you can get advice from the Self-Assessment Payment Helpline:

Self-Assessment Payment Helpline
Telephone: 0300 200 3822
Monday to Friday, 8am to 6pm (closed on bank holidays)

There is a special HMRC coronavirus (COVID-19) helpline you can call if there are any other tax bills you are unable to pay specifically due to coronavirus.

Don't forget, if you are self-employed and have been adversely affected by COVID-19, then you may be able to claim a grant through the Self-Employment Income Support Scheme (SEISS).

If your income has been reduced because of coronavirus and you know that your tax bill will be lower than the previous year, you may also wish to consider reducing your payment on account for 2020-2021, which you can do on your Self-Assessment tax return.

For more information on difficulties paying HMRC, visit:
http://www.gov.uk/difficulties-paying-hmrc

Corporation Tax

Private limited companies and limited liability partnerships usually have nine months from their year end to file their company accounts and pay any Corporation Tax due. This year however, this has been extended to 12 months.

Companies House has said that it will temporarily automatically extend the deadlines for certain key statutory filing requirements, such as the filing of company accounts.

HMRC says that it will retain discretion over whether to waive penalties for late filing of Corporation Tax returns where there is a reasonable excuse.

Companies have difficulties in paying their tax bills should contact the Payment Support Service, as it may be possible to set up a Time to Pay Arrangement with HMRC and spread the cost in instalments.

Payment Support Service
Telephone: 0300 200 3835
Monday to Friday, 8am to 6pm (closed on bank holidays)

Deferred VAT

If you delayed paying your VAT for the second quarter of 2020, you will need to make your payment in full by 31 March 2021.

However, if you are still experiencing cashflow difficulties, then you may be able to opt into a new payment scheme, under which you can spread the payments over 11 smaller, interest-free monthly instalments, which will need to be settled by the end of March 2022.

The VAT deferral payment scheme will be launched soon. When it is, you will need to opt in. You must opt in yourself; any agent you have appointed to deal with your accounts will not be able to do it for you.

The scheme will allow you to pay your deferred VAT in instalments without adding interest, and select the number of instalments that suits you best, between two and 11 equal monthly payments.

To qualify for the scheme, you must:

  • Still have deferred VAT owing
  • Be up to date with your VAT returns
  • Opt in before the end of March 2021
  • Pay the first instalment before the end of March 2021
  • Be able to set up a Direct Debit to pay the deferred VAT

You can use the scheme if you are already in a Time to Pay arrangement with other outstanding HMRC debts.

For more information, visit:
http://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

Tailored guidance from Office Assistants

Not sure about the best course of action to take concerning meeting your tax filing and payment responsibilities? Office Assistants can help.

Our knowledge of all the HMRC schemes available is extensive, and we are ready to help devise the best strategy for your business, allowing you the reassurance and time you need to get back on track after such challenging times.

To discuss your situation in detail with one of our qualified experts, please get in touch.

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