Penalties for Filing a Tax Return late have remained pretty much the same for the last 20+years. Filing a date late beyond the 31st January, there will be an automatic £100 fine. Fail to file in another six months a further £100 is added. The real penalty was in the 5% charge that HMRC could charge if you had not paid a month after the deadline.
However, this is now likely to change. Under the new Making Tax Digital regulations that will form the basis of the Budget later this year. It has been drafted that HMRC has outlined a significant change to the way they will be levying tax return penalties for late filing breaches under the new regulations. Rather than base penalties on each return, 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.
So, if you miss a deadline a point will be applied, a specified number of points that are accrued will result in a penalty. Accordingly, the number of points required for a penalty depends on the filing frequency of the return.
Furthermore, HMRC is also introducing an amended penalty for deliberately withholding information from HMRC. They will have 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.
Sounds like a similar system? It seems like HMRC are adopting ones given by the DVLA for driving offences. Of course, there is no suggestion that if you gather enough points in tax return penalties you will then be banned from paying tax…! More to follow once the Autumn Budget has been announced.
Recent Comments