In the recently published draft clauses that will form the basis of the Budget later this year, HMRC has outlined a significant change to the way they will be levying penalties for late filing breaches under the Making Tax Digital regulations.
Rather than base penalties on each transgression, taxpayers will receive a penalty point per event, and when these penalties reach a certain amount the taxpayers will be required to pay a fixed penalty.
Essentially, if you miss a deadline a point will be given, but a penalty will only be charged when a specified number of points are accrued. According to HMRC, the number of points required for a penalty to be levied depends on the filing frequency of the return.
HMRC is also introducing an amended penalty for deliberately withholding information from HMRC. The changes to this penalty are required to accommodate the new points based regime and ensure that the penalty works as intended. The enacting schedule gives HMRC the power to charge penalties where a taxpayer deliberately withholds information which would enable HMRC to assess their tax liability. These penalties are based on a percentage of the tax due and can be reduced based on the taxpayer’s willingness to correct past disclosure.
The new system is similar to that adopted for driving offences. Of course, there is no suggestion that if you gather enough points to pay tax penalties you will then be banned from paying tax…
- Time to check Minimum Wage Rates? - July 22, 2021
- Claiming for work-related expenses - July 20, 2021
- Is inflation something to be concerned about? - July 15, 2021
- Is July 19th freedom-day? - July 13, 2021
- Business rates overall for England - July 8, 2021
- Furlough support changed 1 July 2021 - July 6, 2021
- Tax Diary July/August 2021 - July 1, 2021
- Taking goods abroad to sell? - July 1, 2021