COVID-19: Tax amendments you should be aware of

Wendy Ramsay

Wendy Ramsay

Tax Senior Manager

There has been much publicity on the financial support being offered to businesses which have been adversely affected by COVID-19, but there are also certain relaxations of the rules regarding compliance, payment of tax and penalties that you should be aware of.

Failure to lodge Self-Assessment Tax Return

As the 2018/19 submission deadline of 31 January 2020 was well before the start of the lockdown period, HMRC are unlikely to withdraw any late filing penalties. However, if it can be demonstrated that there is a reasonable excuse then penalties may be reconsidered. For example if the 18/19 return was issued late with a submission deadline of March 2020, then if you were unable to comply due to coronavirus, an appeal could be made.

Payment on account deferral

The deferral of the 31 July 2020 payment on account until 31 January 2021 has been well publicised, however you are encouraged to pay on time if you can. The tax remains payable and will impose additional pressures on 31 January 2021 when the 2019/20 balancing tax payment, and first payment on account for 2020/21 will also be due.  It has been advised that HMRC will not charge interest and penalties on the 31 July 2020 payment on account as long as it is paid by 31 January 2021. Thereafter, the usual interest, penalties and collection procedures will apply.

Time to Pay arrangement

Companies who pay their Corporation Tax liabilities through quarterly instalment payments may now be anticipating business profits being adversely affected by the current coronavirus situation. If this is the case, we advise revisiting your forecasts and quarterly tax instalments and reducing future quarterly payments accordingly. Should the company be experiencing cash flow problems, it may be possible to defer quarterly payments or agree Time to Pay Arrangements with HMRC.

If you believe that you have now overpaid Corporation Tax based on future profit levels, you can contact HMRC to request a repayment for the amount overpaid.

If you envisage being unable to pay your Corporation Tax on time, or you wish to discuss repayment of previously paid quarterly instalment payments, we would recommend that you get in touch with us as soon as possible. We can assist with deferring payments or setting up Time to Pay Arrangements, and help you liaise with HMRC regarding repayments. 

Appeals and reviews of HMRC decisions

Generally, appeals must be lodged within 30 days of the date of the decision. However if the taxpayer or their business has been affected by coronavirus, HMRC will give an extra three months to appeal any decision or penalty dated February 2020 or later. This extra three months will also apply if HMRC have already carried out a review of a decision and you wish to appeal further. You must be able to explain why the delay is due to coronavirus.

HMRC enquiries and tax investigations

We have seen HMRC place several cases on hold during May to August, as many HMRC staff were being re-deployed to assist with COVID support schemes. HMRC are now writing to those concerned to request that the cases are progressed as long as there are no material issues due to coronavirus. To date we have not noticed any particular leniency from HMRC regarding settlement negotiations. If anything, we expect HMRC to take a harder line in future as they seek to maximise the return on an enquiry.

COVID-19 enquiries

HMRC recently advised that they consider there may have been widespread misuse of the Job Retention Scheme, and are issuing 3,000 letters per week to suspected parties.  It is likely that this will extend into all COVID support areas in the coming months, so if you have any concerns on claims you have made, get in touch with us as soon as possible.  Clients subscribed to our Tax Enquiry Service (TES) should note that this will cover the costs of enquiries into COVID support schemes as long as any errors were not deliberate.

Capital Gains Tax (CGT) report on residential property disposal

For disposals of UK residential property on or after 6 April 2020, the CGT report is due within 30 days for UK residents. HMRC have advised that they will not issue late filing penalties for any transactions completed before 1 July 2020 and reported up to 31 July 2020. Any tax that should have been paid within the 30-day period will be subject to interest if paid late. More information on this can be found in our blog here.

Companies House & Corporation Tax

The accounts filing deadline has been extended by three months, but as yet HMRC have not altered the due date for the payment of the corporation tax, which remains at nine months after the end of the accounting period. For more information on the impact this could have, read our short blog here.

Reasonable excuse

Appeals to HMRC on such matters as late payment and late filings are based on “reasonable excuse” which can include the following :

  • Death of partner or close relative shortly before the deadline;
  • An unexpected stay in hospital that prevented you from dealing with your tax affairs;
  • Serious or life-threatening illness;
  • Computer or software failure just before or while preparing the online return;
  • Fire, flood or theft that prevented completion of the return.

The reasonable excuse must have been present at the time of the failure, and the payment or filing must then be made as soon as possible after the reasonable excuse is resolved.

Coronavirus may be considered as a reasonable excuse, as long as a full explanation of the issues is provided. For example; shielding or social distancing measures may have prevented access to all the necessary information.

Get in touch

If you have any queries on matters which have been affected by the coronavirus, our team will be happy to advise on and support discussions with HMRC. Get in touch with me at, or John McAuslin.