HMRC recently published details of the
penalties system for late submissions and payments under Making Tax Digital, confirming it plans to pursue a points-based model.
Under this model, taxpayers would receive a point every time they
fail to submit on time. A penalty will be charged at a certain
threshold, which will be dependent on the frequency of their submission
obligations. After the threshold has been reached, a penalty will be
charged for every subsequent submission failure.
The penalty thresholds put forward are:
- 2 points for annual
submissions,
- 4 points for quarterly submissions and
- 5 points for monthly
submissions.
One amendment to the model following the consultation is that penalty
points will have a shelf-life and would expire after a period of good
compliance.
Periods of good compliance were outlined by HMRC as:
- 2 submissions for annual submissions,
- 4 for quarterly, and
- 6 for monthly.
HMRC have said they will make penalty points and actual penalties
appealable, and give taxpayers the option to claim a reasonable excuse
for failing to meet a filing obligation.
Which may well open up a can of worms, given how many appeals are likely to be lodged as a result of the increase obligations on the hapless taxpayers under MTD>
Tax does have to be taxing.
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