Companies may pay a £100 penalty rather than waste time talking to HMRC

HMRC should give companies that have struggled through the pandemic an extra month in which to file their tax returns , say leading tax and advisory firm Blick Rothenberg.

Heather Self , a partner at the firm said: “ Companies with December year ends need to file their corporation tax returns by 31 December 2020.Normally, that’s not a problem – but this year it might be.”

She added: “ With all the disruption caused by COVID, many companies are struggling to keep their businesses alive, and dealing with accounting and tax admin is not always a priority.”

Heather said: “ Companies House recognised this several months ago and gave an automatic three-month extension for filing accounts, back in June. Importantly, companies don’t have to apply for this – filing deadlines have been updated automatically, and beyond that there will be sympathetic treatment if there are further delays.”

She added: “ Meanwhile, HMRC have said that late filing of corporation tax returns will be treated sympathetically, and that COVID may be a ‘reasonable excuse’. But they haven’t given an automatic extension. This means that companies and their advisers are going to have to spend time seeking extensions on a case-by-case basis, or filing appeals – or just accepting the automatic £100 penalty.”

Heather said: “ What HMRC don’t seem to realise is that if a company is 3 months late filing its accounts – using the automatic extension given by Companies House – then it’s going to be difficult (and maybe impossible) to meet the corporation tax filing deadline. Giving a short automatic extension would be a great help, even if only for a month. ”

She added: “ “Spending time on the phone to HMRC asking for an extension, or appealing a penalty because COVID is a reasonable excuse, is not a good use of time for companies, their advisers or HMRC.”