Tax returns must be in by 31 January to avoid penalty

Farmers are being urged to get ahead with their self-assessment tax returns to avoid missing the 31 January 2022 filing deadline and incurring a penalty payment.

Martyn Dobinson, a partner at Saffery Champness, warns that any delays should only be the result of exceptional circumstances and must not include excuses such as not receiving a reminder from HMRC or finding the online filing system too difficult to use.

“Dealing with disputed penalty and interest notices can be time-consuming and stressful and detract from getting on with your business,’’ he advises.

See also: How does tax averaging work for farmers

For many, there will be a balancing payment to be made in respect of a 2020/21 liability and a payment on account of liability for the 2021/22 tax year by the same date.

If they are not paid on time, interest will be applied.

Acceptable reasons for late returns

HMRC will accept certain “reasonable excuses” for late payment or the late submission of a tax return, including a serious or life-threatening illness, failure of a computer or software while an online return was being prepared, or a fire, flood or theft, says Mr Dobinson.

Unexpected postal disruption and delays due to a disability are also cited as reasonable excuses.

But a return or payment must be sent as soon as possible after the circumstances leading to a deadline being missed are resolved, says Mr Dobinson.

Where tax obligations are missed due to Covid-19, HMRC may accept that as a reasonable excuse, he adds.

But the taxpayer must explain how they were affected by Covid-19 in their appeal and how that led to the deadline being missed.

The return or payment must still be made as soon as possible.

“Given that returns will need to be made and tax paid anyway, it’s much easier to meet the end of January tax filing and payment obligations if at all possible, rather than to have to dispute penalties and interest with HMRC,’’ said Mr Dobinson.