HMRC have announced a late filing penalty relaxation for some taxpayers affected by Basis Period Reform, where details of overlap profits remain outstanding. HMRC says that over another one million taxpayers were not so lucky when they missed the 31st January deadline. That means HMRC will send out late filing penalties worth over £100 million next month.

Late filing penalty

Background

Under the Basis Period Reform rules, the profits of all unincorporated businesses will be assessed on a tax year basis from 6 April 2024. 

  • Tax year 2023-24 is a transitional year; details of the business's brought forward overlap profits are needed to undertake transitional calculations. 

The 2023-24 tax return filing deadline was 31 January 2025.

Late filing penalty easement

In January's HMRC Stakeholder Digest, HMRC reminds taxpayers that details of overlap relief figures can be requested using an online tool.

HMRC added: "If [taxpayers] have applied on or before the filing deadline of 31 January 2025 and have not received a response from us, they have until 28 February 2025 to file their return without incurring a late filing penalty.

They should enter a provisional estimated figure if they do not know the actual figure. Once they have their final overlap relief figure they should amend their return. Interest will still accrue from 1 February 2025 on outstanding amounts of tax".

Over 1.1m tax returns not submitted on time

Over the weekend, HMRC published statistics showing that 12,187,811 Self Assessment tax returns were expected for 2023-24. 

  • Of those, 11,027,962 were received by 31 January 2025, meaning that 1,159,849 taxpayers missed the deadline. 

Including expected returns, voluntary returns and late registrations, a total of 11,581,962 returns were received by 31 January, with 335,000 being filed on paper. 

Useful guides on this topic

Basis Period reform
What is basis period reform? Who is affected? What is the new basis year for tax? What are the transitional rules? 

Penalties: Late Filing
Late returns can be subject to a mix of fixed and tax-geared penalties. What penalties apply for late filing? Which penalty will apply and when?

Grounds for Appeal: Reasonable excuse
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?

Provisional and estimated figures in tax returns
What is the difference between a provisional and an estimated figure in a tax return? When should provisional figures be used? What are the reporting requirements? When can HMRC charge a penalty?

Self Assessment Return 2023/24: What's new?
2024 Self Assessment toolkit: top tips for completing tax returns for the year ending 5 April 2024.

External links

CIOT: HMRC Stakeholder Digest - January 2025

HMRC: A record 11.5 million tax returns filed by the deadline

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