HMRC has published data revealing that 1.3million taxpayers did not file their self assessment tax returns by the extended 28 February deadline.

The original filing deadline of 31 January was extended by one month to acknowledge the additional pressures faced by individuals and businesses throughout 2021. The £100 late filing penalty was also waived for one month, although interest was still applied to all outstanding balances from 1 February.

It was expected that 12.2million customers should have completed a 2020-21 tax return, with 11.3million received by 28 February. With 1.3million still not having filed their return, they will now be liable for the £100 late filing penalty – generating a total of £130million in fines.

Taxpayers have until 1 April to avoid the late payment penalty, either by paying their outstanding tax in full or setting up a Time to Pay Arrangement.

Time to Pay Arrangement

Taxpayers can set up a payment plan to spread the cost of their tax bill, including any tax, duty, penalties or surcharges.

A Time to Pay Arrangement can be set up online if

  • The amount owed is £30,000 or less;
  • There are no other payment plans or debts with HMRC;
  • Tax returns are up to date; and
  • It is less than 60 days after the payment deadline.

Based on the information provided to HMRC, they will calculate the taxpayers monthly disposable income. It is normally anticipated that 50% of disposable income will be paid into a Time to Pay Arrangement.

The length of an arrangement depends on how much is owed – there is no upper limit on the duration of an arrangement.

Further details on setting up a Time to Pay Arrangement can be found here.