Make sure you have paid your tax before 03 March 2023 to avoid an interest penalty
Make sure you have paid your tax before 03 March 2023 to avoid an interest penalty.
Taxpayers have until 03 March 2023 to pay their 2021/22 self-assessment tax bills or further penalties equal to 5% of the outstanding tax will be charged.
The final deadline to settle outstanding tax charges for 2021/22 tax year is Friday 3 March. It is possible to set up a ‘time to pay’ arrangement to spread repayment costs, as long as you have applied to HMRC to do this before the deadline.
The first late payment penalty is calculated at 5% of the amount for 2021/22 still outstanding on 3 March 2023.
If you agree a ‘time to pay’ arrangement with HMRC and do not make the payments on time as agreed, HMRC may charge late payment penalties as if the arrangement was not agreed.
‘The rate of interest on late payments is significantly higher than it has been in recent years. From 21 February 2023, the rate was 6.5% per year. There is no right of appeal against late payment interest.’
If you believe you have a reasonable excuse for non-payment, you need to be aware that HMRC define a reasonable excuse as something which means you did not meet an obligation which you took reasonable care to meet. For example, you may have taken all reasonable action to ensure the payment is made on time, but a banking error beyond your control meant that HMRC did not receive the payment.
For an appeal to be successful, it is important to ensure the payment is made without unreasonable delay after the reasonable excuse ended.
Even if you do not have a reasonable excuse, it is technically possible for HMRC to reduce the penalty amount if there are special circumstances. However, this is at HMRC’s discretion, and such cases would be uncommon and exceptional. In most cases where there are special circumstances, a reasonable excuse would usually exist alongside them.
Insufficiency of funds or inability to pay is not, by itself, a reasonable excuse (or special circumstances). But the underlying causes may be.
If you find yourself needing help, please feel free to contact us and discuss the options.