How Do You Get a Tax Extension?

The dreaded tax season is upon us again. And what better time to learn about your possible courses of action in the off chance that you seem to be missing your deadline? While getting a tax extension itself is debatable, there are a few steps you can take to appeal to HMRC for not paying the late fine or if you wish for an extended tax deadline.

Here are a few questions you might be asking yourself regarding tax deadlines and the answers that can help you with developing your tax and financial strategies.

What are the deadlines you must follow?

Before we get into the details of filing an appeal to get your tax deadline extended or against the penalty, we must first understand beyond a shadow of doubt of what the deadlines are. Only then can we know if we even need to file for the appeal in the first place.

Depending on your choice of method for filing your taxes, your deadline will vary. For instance, you must ensure that your on-paper tax return reaches HMRC by the 31st of October after the end of the tax year. Should you choose to opt for the online method, however, you will be granted an automatic three-month extension with the new deadline for submission being 31st of January of the next calendar year.

Keeping this in mind, you can opt for filing your returns online to get an extension by default without having to do much else.

The deadline to pay your taxes in full is also the 31st of January. However, there is usually an extended payment deadline of 31st of July if you contribute towards your bill via advance payments.

What happens if you miss the deadlines?

If you are not able to submit your return by either of those deadlines, however, you will most certainly be in hot water. To be more specific, you will be liable to pay an immediate £100 penalty if you miss the deadline even by a second, irrespective of whether you owe any tax. This should be incentivising enough to adhere to the deadlines.

Because of the unprecedented circumstances set in motion by the corona virus pandemic, HMRC extended the 2021 tax return filing deadline by four weeks. This meant that the £100 late-submission fine would only be applicable after the 28th of February.

In addition to the direct £100 fine, there are also time-sensitive late filing penalties. Beginning from the deadline, you will be charged £10 per day up to a period of three months, garnering a maximum of £900. For the next three months, you will be charged another £300 or 5% of the tax you owe, whichever is greater. And for the next six months, the greater-of-£300-or-5% rule that we just discussed would once again be applicable.

And these are just the penalties for late filing. Should you be unable to pay what you owe in a timely manner, an additional 5% of the owing amount will be applicable for every three months that the payment is delayed.

What is the right time to file an appeal?

Having understood the deadlines and the penalties, we shall now discuss going about filing an appeal. Depending on the entity filing the returns, the appeal timelines and procedures differ.

For instance, private limited companies may be allowed to extend their accounts filing deadlines for reasons such as the company being afflicted by COVID-19 or a fire destroying company records. In such instances, you must file for an extension before your filing deadline, or your application will not be considered. Additionally, you are not likely to get an extension if you have already requested for one.

If you are filing via the self-assessment method, you may not be able to appeal for an extension, but you can still appeal against the £100 late-submission fine. HMRC accepts appeals made behind a number of justifiable reasons including:

  • Death of a close relative close to the deadline
  • Affliction by COVID-19
  • Unexpected hospitalization
  • Technical failures during the filing process
  • Unpredictable postal delays

Examples of an unreasonable excuse could be unreliability of the person entrusted to file your return, payment failure due to insufficient funds, or mistakes in the filed return.

The appeal for this penalty should be filed within 30 days of the issuance date of the penalty notice.

How to appeal against the penalty?

You can apply for an extension or late-fee waiving online or by post.

To apply for an extension (for private limited companies):

  1. Sign in to Companies House using your credentials.
  2. Input your company number, your valid excuse and explanation, and attach any supporting documents.
  3. Wait to hear back from HMRC.

Or write to your local Companies House explaining your circumstances and clearly mentioning the duration you will be needing to file your accounts.

To appeal a Self-Assessment penalty:

  1. Sign in to Government Gateway using your credentials.
  2. Input the issuance date of the penalty, the date you filed your return, and the reasonable excuse with explanation for late filing.
  3. Wait to hear back from HMRC.

Or use the appeal form that comes with the penalty letter sent by HMRC and follow the instructions on the letter.

The experts here at Lawrence Grant come fully equipped with the necessary know-how to guide you on your journey to filing your taxes in a comprehensive and timely manner. Get in touch to learn more.

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