A fresh system is in the process of being introduced by HMRC. The UK government’s tax-collecting branch is testing a scheme with approximately 100 taxpayers before eventually extending it to anyone who files a tax return.
Under the regulations for the new system, which started in January, people who fail to meet self-assessment deadlines under the Making Tax Digital scheme will receive penalty points instead of an automatic £100 fine.
The guidelines for this novel system stipulate that each missed deadline results in a penalty point. Once a certain number of points is accumulated, those affected will be obliged to pay a £200 fine.
For those who file their tax returns annually, two missed deadlines within a span of two years would activate a £200 fine. Conversely, if someone submits returns quarterly, four missed deadlines over a two-year period would result in a fine, reports Yorkshire Live.
« The new penalty regime is simpler and fairer than the previous system. The new system will penalise those who persistently do not comply by missing filing and payment deadlines, while being more lenient on those who occasionally fail to meet obligations, » stated HMRC in a policy document.
Those who fail to meet their deadlines will also face charges based on the late payment of tax. Reports suggest that the new late payment penalty will consist of two charges.
The first of these will be due 30 days after the payment due date. It is expected to be calculated as a set percentage of the outstanding balance.
A second charge would then become payable from day 31 and will accumulate daily, depending on the amount of money that is owed, according to Birmingham Live. An HMRC spokesperson stated: « We’re committed to helping customers get their tax right to avoid fines altogether.
« Our fairer penalty points system for late returns will mean that only Making Tax Digital customers who persistently miss deadlines will incur a financial penalty. »
HMRC have announced they will endeavour to mitigate the impact of the new system with a publicity campaign. They also plan to provide information to those interested in signing up.
