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Penalties under Making Tax Digital (MTD)

HMRC has issued a further document setting out its proposed options for the new penalties under the MTD regime.

The consultation covers penalties for late submission and late payment.  It outlines three options for a new penalty for non-deliberate failures to meet filing deadlines.  HMRC says that the aim is for these to operate for all taxes with regular filing obligations. 

The three possibilities are:-

  • A points-based model to apply for each tax separately.  A taxpayer would receive a point each time he fails to provide a submission on time.  When the points reach a certain threshold a penalty would be charged.  The points are reset after a period of good compliance;
  • HMRC would carry out an automated regular review of compliance with submission obligations over a set period.  There would be no penalty for the first failure but for further defaults a penalty would be charged at the time of the review, based on the number of failures; 
  • HMRC would not charge a penalty immediately on the first failure.  Instead it would suspend the penalty on condition that the taxpayer provides the outstanding submission within a specified time.  Suspension could be applied on more than one occasion but this would be limited.

HMRC is also considering charging penalty interest on all taxes and duties.  This would apply to taxpayers who do not pay their tax by the due date and have not adhered to time-to-pay arrangements, it would be charged in addition to late payment interest. 



Date: 13th April, 2017
Author: Cathy Corns


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