In response to the COVID-19 outbreak, HMRC announced that taxpayers could opt to defer their second self-assessment payment on account for the 2019/20 tax year if they are finding it difficult to make their second payment on account by the normal due date of 31 July 2020 due to the impact of coronavirus. HMRC will not charge interest or penalties on any amount of the deferred payment on account, provided it is paid on or before 31 January 2021.
HMRC’s guidance on GOV.UK says that you can still make the payment by 31 July 2020 as normal if you’re able to do so.
HMRC have been issuing self-assessment statements recently which are showing the second payment on account as being due on 31 January 2021 rather than the normal due date of 31 July 2020 (there are also references to HMRC’s guidance and deferral being optional).
We are aware that this has caused understandable confusion amongst taxpayers and their advisers, and led people to think that the deferral of the July payment on account to 31 January 2021 is automatic. We have therefore sought clarification about this from HMRC.
HMRC have advised us that the inclusion of the revised due date of 31 January 2021 for the 31 July 2020 payment on account within the June self-assessment statements was an unavoidable consequence of reconfiguring their IT systems to prevent interest being charged and debt collection procedures commencing. It was not possible to explain this on the June statements because there was very limited available space to include the deferral message without corrupting wider content.
To address any confusion caused, HMRC have updated their GOV.UK guidance to explain why the due date for paying the 31 July 2020 payment on account has changed to 31 January 2021 to make it clear that HMRC have not applied a blanket deferral to all customers and they can choose whether to defer. They have also provided us with the following statement:
HMRC have not automatically deferred the July 2020 Self- Assessment Payment on Account (POA) to 31 January 2021 for all customers.
Customers have the option to pay as normal on 31 July 2020 or to pay the POA in full at any time before 31 January 2021 without incurring interest or penalties.
The June Self-Assessment statement included an insert which advised customers they could defer the July 2020 POA. This insert pointed to the guidance at https://www.gov.uk/guidance/defer-your-self-assessment-payment-on-account-due-to-coronavirus-covid-19 which sets out the position in more detail.
To ensure Self-Assessment deferral customers do not incur late payment interest HMRC had to change the relevant due date (for payment) on the Self- Assessment IT system from 31 July 2020 to 31 January 2021. Doing this resulted in the revised due date (31 January 2021) appearing on all June statements. This was an unavoidable systems issue but HMRC appreciate this may have unintentionally caused confusion for some customers. HMRC are therefore updating their GOV.UK guidance to clarify this position.
To confirm - it remains that the deferral is optional and it is for customers (not HMRC) to decide if they want to defer their 31 July 2020 POA if they are finding it difficult to make this payment due to the impact of coronavirus.
This makes it clear that deferral is not automatic and is available only to taxpayers who are finding it difficult to make their second payment on account by 31 July 2020 due to the impact of coronavirus.
Members are reminded that when advising clients they should not engage in assisting a client to abuse or take unfair advantage of any of the Government support for businesses and individuals during the COVID-19 emergency, including use of ‘Time To Pay’ arrangements. Advisers should fully explore what support is available for their client’s actions ethically and within the law. For further information about complying with Professional Conduct in Relation to Taxation (PCRT) during the COVID-19 crisis see here.