5% self assessment income tax penalty

rjwb

Anyone else been notified by HMRC that they must pay a 5% penalty for late payment of 19/20 income tax, despite having agreed a Time To Pay arrangement?

I'm pretty sure the deal was that if anyone agreed an arrangement by 1 April, the 5% penalty was waived, you just paid interest. And I signed up on 8 January. So I will wait a few days to see if this is a mistake and then appeal it... It's not showing up on my statement of tax outstanding online at the moment.

Annoying though and I wonder how many folk might pay this and/or get very stressed about paying it?

Grumpy_chap

rjwb said:

Anyone else been notified by HMRC that they must pay a 5% penalty for late payment of 19/20 income tax, despite having agreed a Time To Pay arrangement?

I'm pretty sure the deal was that if anyone agreed an arrangement by 1 April, the 5% penalty was waived, you just paid interest. And I signed up on 8 January. So I will wait a few days to see if this is a mistake and then appeal it... It's not showing up on my statement of tax outstanding online at the moment.

Annoying though and I wonder how many folk might pay this and/or get very stressed about paying it?

I cannot advise on the details, but the first thing I'd be checking is that the communication is genuine from HMRC, and not a scam of some kind.

Is the communication a letter received via the post, or an e-mail / text?

sheramber

Are you sure ot is not a penalty for late filing of the return?

antonic

rjwb said:

Anyone else been notified by HMRC that they must pay a 5% penalty for late payment of 19/20 income tax, despite having agreed a Time To Pay arrangement?

I'm pretty sure the deal was that if anyone agreed an arrangement by 1 April, the 5% penalty was waived, you just paid interest. And I signed up on 8 January. So I will wait a few days to see if this is a mistake and then appeal it... It's not showing up on my statement of tax outstanding online at the moment.

Annoying though and I wonder how many folk might pay this and/or get very stressed about paying it?

https://www.gov.uk/difficulties-paying-hmrc

If you pay a tax bill late you must pay interest on the amount you owe until it’s paid off. You can avoid penalties by arranging a payment plan with HMRC before the tax is due – or by 1 April for Self Assessment.

See above link, interest will be charged even if a repayment arrangement is agreed, as its in the legislation.
The interest will be calculated once the arrangement has been cleared.
You can appeal the interest charge if you want.

Jeremy535897

"However, late payment penalties should be avoided if an instalment plan is in place prior to the penalty becoming due. HMRC has announced that the 30-day late payment penalty which would usually have applied for any 2019/20 tax which was still outstanding on 3 March 2021 will be waived provided that the tax was paid, or a payment plan arranged for the full amount, on or before 1 April 2021."

From https://www.litrg.org.uk/tax-guides/coronavirus-guidance/coronavirus-further-self-employment-considerations

rjwb

Thanks for the links both. I found a press release from HMRC dated Feb 2021 that confirms the same.

It's definitely a late payment penalty. I filed the return on 24/9/20, and that date is still showing on my govt gateway account, so well before the 31/1/21 deadline.

I think it's genuine. I just got the normal email telling me to log in to the GG as I had a new message. So I logged in as usual and there was a message on my account.

rjwb

So they sat on it for 16 weeks until last Friday, then allowed the appeal and cancelled the penalty. It took a few chaser letters as well, which probably had no effect but provided a bit of cathartic release for me! Unfortunately I've had to agree another 'time to pay' arrangement for the coming year and the penalty got wrapped into that (they wouldn't accept it any other way), but I daresay it will all come out in the wash in January 2023 when I pay my 2021/22 tax.