HMRC may waive penalties on late corporation tax returns caused by Covid-19 disruption, ICAEW reveals

HM Revenue & Customs (HMRC) may waive penalties for businesses who file late corporation tax returns as a result of Covid-19 disruption, it has been revealed.

Late corporation tax returns usually attract an automatic penalty fine, increasing the later the return is filed.

However, HMRC has the discretion to waive penalties for late submission where there is a “reasonable excuse”.

And according to the Institute of Chartered Accountants in England and Wales (ICAEW), Covid-19 disruption and related delays may be included in this directive.

The report comes after an email exchange between the accounting regulator and HMRC, during which the tax office confirmed that “where a tax return filing date has not yet passed and a company is having difficulty filing its return on time, it can get in touch with HMRC to request deferral of a late filing penalty”.

This aligns with the new Companies House policy, which has extended the deadline for filing accounts that were due to be filed between 27 June 2020 and 5 April 2021 for up to nine months.

Corporation tax returns must be accompanied by a signed set of company accounts, so complementary late filing policies will be welcomed.

Commenting on the report, the ICAEW said: “ICAEW’s Tax Faculty has heard from one member that where the accounts filing has been delayed an informal one-month filing extension for tax return filing would be granted by HMRC where requested.

“This would need to be applied for within the two weeks before the normal deadline – so between 17 and 31 December 2020 for a limited company with a 31 December 2019 year end.”

The regulator added: “ICAEW’s Tax Faculty reminds members that where companies have incurred other forms of difficulties in filing their corporation tax returns, which might be a result of the COVID-19 pandemic, they may request a deferral on the basis that they have a ‘reasonable excuse’ for late filing.”

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