Contact Us

Although there has still not been any confirmation following the General Election, Making Tax Digital for business (MTD) is still expected to be rolled out from April 2018.

To prepare for one of the biggest changes to the UK’s tax system in years, HM Revenue & Customs (HMRC) has been fine-tuning a system of late submission and late payment penalties, which are due to be introduced in April 2019 after a year-long respite to give taxpayers the chance to familiarise themselves with Making Tax Digital.

HMRC collected feedback on three options for a late submission model during a consultation it ran from 20th March to 11th June.

Points-based system – this would see taxpayers receive a point every time they fail to file on time. Once a certain number of points has been accumulated, a penalty would be charged. The points would reset after a period of compliance. HMRC has revised this model from an earlier proposal to apply per tax rather than across all taxes.

Regular review system – an HMRC automated regular review of customers’ compliance. This model will see a taxpayer given penalties based on their record of compliance, although there would be no penalty for the first failure during the set period.

Suspension of penalties system –  A taxpayer would be granted more time to complete their submission and avoid the penalty. As with the regular review system, this model would also not apply a penalty for the first failure.

 


Call us today on 0800 0523 555 to help get your business ready for Making Tax Digital or submit an online enquiry here.

 

Although the consultation was mainly focused on the late submissions model, it also considered using penalty interest as a sanction for late payment of corporation tax, income tax and VAT. Separate to this, HMRC charges 2.75% late payment interest for main taxes and duties. HMRC differentiated the two payments as the late payment interest is technically not a penalty for late payment.

However, the Association of Taxation Technicians (ATT) criticised this option as it may cause unnecessary confusion. Although HMRC outlines precise differences to the two payments, for taxpayers it would be viewed as “a distinction without a difference”.

Yvette Nunn, co-chair of ATT’s technical steering group, said: “On late payment interest, we see no practical merit in HMRC simultaneously charging a taxpayer two different rates of interest on the same overdue tax. Simplicity and effectiveness both point to the benefit of a single penalty rate. In terms of timing, we think that the penalty rate should apply once the tax is overdue by 30 days, rather than the 14 days proposed by HMRC.”

Date published 21 Jun 2017

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Choose the right accounting firm for you

Running your own business can be challenging so why not let TaxAssist Accountants manage your tax, accounting, bookkeeping and payroll needs? If you are not receiving the service you deserve from your accountant, then perhaps it’s time to make the switch?

Local business focus icon

Local business focus

We specialise in supporting independent businesses and work with 80,684 clients. Each TaxAssist Accountant runs their own business, and are passionate about supporting you.

Come and meet us icon

Come and meet us

We enjoy talking to business owners and self-employed professionals who are looking to get the most out of their accountant. You can visit us at any of our 409 locations, meet with us online through video call software, or talk to us by telephone.

Switching is simple icon

Switching is simple

Changing accountants is easier than you might think. There are no tax implications and you can switch at any time in the year and our team will guide you through the process for a smooth transition.

See how TaxAssist Accountants can help you with a free, no obligation consultation

0800 0523 555

Or contact us