Submit your tax return by 28 February to avoid a fine
HAVING SPENT much of autumn and winter urging freelances to submit your tax return by 31 January, it is the Freelance's duty to inform you that the deadline to submit you 2019-2020 tax return has effectively been extended. Days before what would normally have been the deadline, HMRC (the tax people) told the Guardian that due to the "immense pressure" everyone is under right now, if you submit your tax return by 28 February you will escape the usual automatic three-figure fine for failing to send in a tax return for the period covering April 6 2019 to April 5 2020. It confirms this on its official advice page.
HOWEVER, if there is any chance that you may want to apply for the fourth slice of Self-Employment Income Support Scheme (SEISS), AND IF your eligibility based on last year's tax return is low, then we recommend doing it now anyway. There's a small chance that the fourth slice will take this year's return into account. The formal deadline remains 31 January. Having the previous tax year's calculation already done and dusted will speed up any such applications, we believe.
The Guardian estimated that early on Monday 25 January over three million people had still not filled in their 2019-2020 tax return.
We recommend those who still haven't sent in a tax return for 2019-2020 do so well before 28 February. The HMRC website often becomes overloaded and crashes in the frantic last days leading up to the deadline, and this year will be no different. HMRC has been known to show leniency to those who tried to submit a tax return in the last days of the deadline but couldn't due to the platform crashing. But good luck trying to prove to HMRC that this was the case, or getting hold of them at all in those chaotic final days.
You may find too late in the day that you need to contact HMRC with a query about filling in your tax return, which is another reason to do it now rather than in the final hours of 28 February. Expect to wait well over an hour to talk to a human being at HMRC as the click ticks down to the midnight 28 February deadline.
While the furlough scheme for employees has recently been extended, we still await news of whether SEISS will be extended to a fourth payment, and if so what amount of previous earnings it will be, or what period it will cover. We hear that the announcement of a fourth SEISS payment (if there is one) might not come until the Budget on 3 March. The NUJ continues to lobby for improvements to the scheme.
Quirks in the tax system
Meanwhile the Commons Public Accounts Committee (PAC) on 20 January formally gave HMRC six weeks from that day to respond for its request for an explanation as to why it had so far unable to provide support to the estimated three million "excluded" self-employed who had fallen foul of what the Committee described as "quirks in the tax system".
These - they include NUJ members - are covered neither by the furlough scheme for employees or SEISS. They include some PAYE freelances, those who recently become self-employed, those who earned more in employment than in self-employment in recent tax years. (in some cases they earned very little more in employment.) Self-employed people who operate as limited companies, especially those with a turnover of more than £50,000 are also among the ranks of the "excluded".
HMRC now has a deadline to account for their failure to provide for these many excluded self-employed people, and to explain the Public Accounts Committee what their plan is to do. However, the Freelance understands the PAC's instruction to HMRC is "non-binding". More here.
If you cannot pay on time
Having submitted your tax return, you then have to pay them the amount of tax calculated. In most cases HMRC will expect some or all of the tax due to them by the usual 31 January date, and start charging interest for any tax due from 1 February. Many self-employed taxpayers will have a proportion due via "payments on account" on 31 January and the balance due by 31 July. HMRC will tell you what your payment arrangements are when you log in to their self-assessment platform.
HMRC is aware that we're all skint as a result of coronavirus: some members may already have been contacted by HMRC to be told that their payments due on account can be made by a later date. If you have not received any such communication by HMRC, then you should contact them and tell them you're having trouble paying them the amount of tax due by the due date.
There's guidance on the HMRC website on deferring your second tax payment for 2019-2020, the one due on 31 July, here.
If you are unable to render unto HMRC what's due to HMRC in your first tax payment - apparently still due on 31 January - you can contact them about paying by instalments. Or there's HMRC's "If you cannot pay you tax bill on time" page, which links to their coronavirus hotline.
The tax people will consider covid-related issues as a "reasonable excuse", a basis on which to lodge appeals against fines and other decisions, see here.