HMRC have bowed to pressure from professional bodies and waived late filing penalties on tax returns as long as the taxpayer can file their return online by 28 February.

With days left before 31 January, HMRC’s chief executive Jim Harra effectively extended the tax return deadline after conceding that the tax department will not charge late filing penalties for late online tax returns submitted by 28 February.

Harra said this move will “give [taxpayers] the breathing space they need to complete and file their returns, without worrying about receiving a penalty”.

“We want to encourage as many people as possible to file their return on time, so we can calculate their tax bill and help them if they can’t pay it straight away. But we recognise the immense pressure that many people are facing in these unprecedented times and it has become increasingly clear that some people will not be able to file their return by 31 January,” said HMRC’s Harra.

HMRC’s late filing penalties backtrack arrived after more than 8.9m people filed their tax returns, leaving another 3m still to file. While the number is still high, it is on track with the number of tax returns left to file at the same time last year.

Although HMRC has progressively backed down on tax return late filing penalties over the past month, it is still pushing anyone who hasn’t filed yet to still do so by 31 January. The relaxation of late filing penalties does not affect the payment deadline, which means interest will be charged from 1 February on any outstanding liabilities if taxpayers don’t pay their bills by 31 January.

Nimesh Shah from Blick Rothenberg is still urging self employed individuals to file by 31 January as they “risk being excluded from future government support” and  “there could be other consequences in relation to their tax affairs”.

Last-minute reprieve

The tax department was previously standing firm on the self assessment deadline, and had rejected pleas from the professional bodies to either extend the deadline or waive late-filing penalties. Although HMRC insisted throughout that it was keeping the situation under review.

HMRC first rejected calls from the professional bodies in December, saying that their proposal to  waive late filing penalties for a short period after 31 January would “complicate” HMRC’s self assessment message and would “send a blanket signal that it is OK to file late”.

However, Harra did acknowledge that pandemic-related disruption from the taxpayer or the agent would be considered a reasonable excuse.