Advice

Penalty!

Chris Stedman
Senior Partner
March 15, 2021
    
3 min read

Something that did not receive a mention in the Budget speech but is likely to have an impact on most of us sooner or later is the new regime for late return and late tax payment penalties.

This has actually been under discussion for a long time and quite possibly slipped the memories of many. Now we have confirmation that most of the existing penalties for late filing and late payment will be scrapped and replaced by a new points-based scheme. The start-dates for this scheme are staggered and are:

  • April 2022 - VAT
  • April 2023 - Self Assessment (where quarterly reporting applies)
  • April 2024 - The rest

The detail is a bit heavy. However the overall principle is to deal relatively leniently with those who are occasionally late and crack down hard on repeat offenders.

This seems an equitable approach and should eliminate the horror stories of taxpayers with a nil liability facing penalties of up to £1600 for prolonged failure to submit a single return.

The approach is not new. A similar one has been in place for ten years for failure to make timely payments of PAYE/NIC/CIS with penalties based on the number of late payments in a tax year.

Hopefully HMRC has given itself adequate time for wide stress testing. They need to stand back and consider whether the design principles that certainly looks sound on paper (as it were) actually cope with real life situations.

As ever there is a lot to be gained from a good track record when it comes to submitting Tax Returns and making payment of taxes.

C&H Stedman
For more info, give us a call on 01442 202650

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