HMRC’s decision to delay penalties for late filing of tax returns for a second year is a relief to advisers as well as tax payers.

The tax office said penalties on late tax returns will not be imposed until 28 February and late tax payments until 1 April though interest will still be charged if the bill is not paid by 31 January.

HMRC said it has only received 6.5m of the 12.2m returns it is expecting to receive this year. The tax authority says many of these taxpayers, or their agents, will have been affected by Covid-19, which could make it difficult to hit the usual filing deadline.

The Chartered Institute of Taxation said the delay also comes as a relief to its members who report increased pressures on their workloads and significant staff absences because of the impact of the COVID pandemic, particularly the Omicron variant which is widespread during the peak filing period.

CIOT’s director of public policy John Cullinane noted that this is not a deferral of the tax return deadline itself and taxpayers should continue to file their return and pay any tax due by 31 January, as interest will still accrue from 1 February.

“This is not an opportunity for tax advisers to ‘shelve’ their tax obligations. A £100 late filing penalty could still apply if the tax return is not filed by midnight on 28 February, and a 5% tax geared penalty will be charged if there is any outstanding tax at midnight on 1 April, unless a payment plan has been agreed with HMRC.”

He added: “We would like the situation to remain under constant review. For example, it may be appropriate to introduce further easements similar to last year, such as extending the time limits for appealing any penalties which are levied and allowing tax advisers to make ‘bulk’ appeals on behalf of their clients.”

HMRC is urging everyone to hit the usual 31 January deadline to avoid being charged 2.75% interest on tax that has not been paid by this date, and those who claim contributory benefits based on National Insurance Contributions (NICs) may be affected if their tax payments are made after 31 January.

The late payment penalty (equal to 5% of the outstanding tax) is being pushed back to 1 April – by this date, the tasx bill must have beeb paid in full, or set up a Time to Pay arrangement.