Delay in implementing late payment penalties
In tandem with the announcement that no late filing penalties will be issued for 2020-21 Self-Assessment returns submitted by 28 February 2022, HMRC has also confirmed a delay in implementing late payment penalties. This means that taxpayers will not be charged a 5% late payment penalty if they pay their tax or set up a payment plan by midnight on 1 April 2022.
Under the normal rules a 5% late payment penalty would have been charged if tax remained outstanding or a payment plan has not been set up before 3 March 2022. This extension gives taxpayers an extra 4 weeks to sort out their affairs before the 5% late payment penalty is levied.
It is important to note that it is only the 5% penalty that is being waived. Interest will still be applied to any balance that was outstanding from 1 February 2022. The current rate of interest is 2.75%. The only way to stop further interest amassing is to pay any tax due in full.
Further late payment penalties will apply, with no extensions, if tax remains outstanding (and no payment plan has been set up) for more than 6 months after the 31 January filing deadline. From 1 August 2022 you will be charged a penalty of the greater of £300 or 5% of the tax due. If your return remains outstanding one year after the filing deadline, then further penalties will be charged from 1 February 2023.
Want to know more about late payments, check out our other articles here on VAT