HMRC have issued a further consultation document on penalties for late submission and late payment in connection with Making Tax Digital
In the response to the consultation on Tax Administration, which was issued on 31 January 2017, HMRC acknowledged that more work was needed on penalties and indicated that there would be further consultation. In the new document, issued on 20 March 2017, they have outlined three possible models for late submission penalties and have also provided an update on the subject of penalty interest.
The three alternative models proposed for late submission penalties are:
Comments are invited on each model and on their relative merits, and responses should be submitted by 11 June 2017. All three models are intended to apply separately to different taxes, but the Government’s longer-term ambition is to develop a model which would apply across taxes. The document indicates that the proposed sanctions could be applied to other regular submission obligations as well as to Making Tax Digital.
The document also outlines the Government’s current thinking on penalty interest. This is intended to apply initially to income tax, corporation tax and VAT but would ultimately be extended across all taxes. The penalty interest would replace existing penalties for late payment and the VAT default surcharge, but would be charged in addition to late payment interest. A consultation is to be launched later in 2017.
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