Pressure mounts to extend 31st January deadline
As the constant coronavirus workload drags on, all accountants are increasingly raising concerns about the 31st January self-assessment deadline. The leading accounting bodies, led by the ICAEW, have raised concerns about the impact of the coronavirus and the effect this has had on individual accountants due to an excessive workload and their clients who are way behind with their paperwork.
An urgent consultation exercise is currently taking place, which is seeking views on whether extending the deadline until 31st March 2021 or waiving late filing penalties for say 3 months, would solve the problem.
Late Filing Penalties 2021
Late Filing Penalties 2021: ‘Everyone’s behind’
Many businesses are busy just trying to survive and the looming January tax return deadline is the last thing on their minds and as a consequence, most are behind with their paperwork.
At MJ&Co, over the last 4 months, we have written at least two letters to clients urging them to collate their paperwork and bring it in urgently. The response, I have to say, has been mixed and we are now phoning individuals personally.
It’s not surprising that many of the self-employed and company directors are behind as most have been too busy firefighting to worry about HMRC and upcoming deadlines. What many of them do not appreciate is the problems facing their accountants.
Late Filing Penalties 2021: Mounting pressure
Whilst accountants have been allowed to stay open, subject to strict Covid-19 precautions, of course! Because of lockdowns and other coronavirus related issues, such as being in a vulnerable group or having to self-isolate, even those clients who have kept on top of their paperwork, have been reluctant to venture out to drop off their paperwork.
The announcement of the current lockdown did spur many individuals to finally drop off their records, problem solved you might think, but you would be wrong. Similar to most other businesses still working we have been on average 20% down on staff as a direct result of self-isolating and the like. Unfortunately, however, we are currently looking at close to 6 months work to be squeezed into the next 11 to 12 weeks, so the pressure is mounting.
Late Filing Penalties 2021: Rishi hasn’t helped
As many of my regular readers will recall, on the whole, I have been complimentary about the various measures brought in by the Chancellor to help individuals and prop up the economy. Unfortunately, in recent weeks he seems to have brought out something new every few days, with the effect on accountants neatly summed up by an accountant from Hereford who posted in an accountants’ forum last week.
“It seems like any time Rishi Sunak opens his mouth; we get put back two weeks in our schedule of work. I estimate we’re at least six weeks behind in our accounts work, and I’m already dreading January.”
Accountancy bodies to request an extension
The joint Tax Faculty committee is actively considering whether to ask HMRC to extend the Self-Assessment deadline, hence the urgent consultation exercise.
Early responses show that most accountants think that this should be done, with The Tax Faculty noting that the effect of the pandemic and meeting the SA deadline goes beyond the client work, with the upheaval of the virus, self-isolation and caring responsibilities has had an impact on all firm’s staff.
And added to the virus-related workload is the post-Brexit transition rules which the committee said is likely to cause an influx of businesses seeking importing and exporting advice from accountants.
Implications of delaying the deadline
An extension to the deadline would have several implications, which will include the need to extend the finalisation date for tax credits and the 30-day date for late penalties also need to change. Other considerations include the effect on the enquiry window for SA returns and the collection of Class 2 national insurance contributions which could be critical to anyone close to retirement.
The other option, as I said in my introduction, is to waive late filing penalties for 2019/20 SA returns filed by 31st March 2021. For this to work and remove added pressure on taxpayers, the waiver needs to be automatic rather than individuals having to lodge formal appeals.
Waiving taxpayer late filing penalties would ease the load on accountants who are behind through no fault of themselves and who’ve been overwhelmed by the Covid-19 workload. We at MJ&Co will do our level best to submit as many tax returns as possible on time, but it’s worth remembering that unless HMRC shows some flexibility, a taxpayer cannot use reliance on an agent as a reasonable excuse for late filing.
If you would like more detailed information on some aspect of UK Tax, send me an e-mail and I’ll be pleased to advise further.
David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.