I hate January.
Not just because it's cold and wet. Or because it is 'tax season' for personal tax returns (the reality is that we don't do many here at IP Tax Solutions as we focus primarily on company tax breaks) but because it's a really expensive month from a tax perspective for me!
Call it a case of 'cobbler's shoes' but I should have remembered that by having a 31 March financial year-end for my company, that the company corporation tax falls due on 1 Jan every year.
Oh yes, that's the same month that the personal tax payment is due (31 Jan). Ouch.
And for the icing on the cake, we also have a VAT payment for the quarter ended 30 Nov due on 7 Jan every year.
Three tax payments due in one month.
Nice work, Steve!
Enough of my grumbles. Unfortunately, HMRC is not feeling particularly sympathetic to business owners (and their tax advisors!) regarding the impending 31 Jan 2021 filing deadline for tax returns to 5 April 2020.
Despite all the COVID-19 mayhem, there is little in the way of relaxation to the filing date or £100 penalty for late filing. The only 'breadcrumb' is the possibility of the penalty being waived on appeal, if you can prove that the missed deadline was a consequence of the COVID-19 pandemic.
UPDATE FROM HMRC ON 25 JAN 2021 (JUST HOURS AFTER THIS WAS PUBLISHED!):
Today HMRC has announced that Self Assessment customers will not receive a penalty for filing their 2019-20 tax return late, as long as they file online by 28 February. We are still encouraging customers who have not yet filed to do so by 31 January, if possible.
Customers still need to pay their Self Assessment tax bill by 31 January. Interest will be charged from 1 February on any outstanding liabilities. Customers can pay online, or through their bank, or by post before they file.
So that's some good(ish) news (although I can't help but feel that a delay on the payment terms would be more welcome...
To make matters worse, tax-payers will now also have to settle any self assessment payments on account that were deferred from 31 July 2020 (as permitted under a special concession at that time) by 31 January 2021.
This could cause cashflow problems for many entrepreneurs, especially when you take into account the VAT deferral from last Summer that will fall due by 31 March this year. I don't think that anyone expected the impact of the pandemic to be this prolonged and now we are going to see potential problems.
I've made the first two of my three payments for the month. Just one more to go...