The government is reforming sanctions for late submission and late payment to make them fairer and more consistent across taxes. The changes will initially apply to VAT and Income Tax Self Assessment (ITSA).
The new late submission penalties will affect those who fail to meet their obligations to provide returns and other information requested by HMRC on time. Taxpayers will no longer receive an automatic financial penalty if they fail to meet a submission obligation. Instead, they will incur a certain number of points for missed obligations before a financial penalty is levied. This new points-based regime is designed to be proportionate, penalising only the small minority who persistently miss their submission obligations rather than those who make occasional mistakes. The regime is designed for taxes with regular submission obligations.
The changes will apply to VAT customers for accounting periods beginning on or after 1 April 2022, to ITSA customers with business or property income over £10,000 per year (who are required to submit digital quarterly updates through Making Tax Digital (MTD) for ITSA) for accounting periods beginning on or after 6 April 2023, and to all other ITSA taxpayers for accounting periods beginning on or after for 6 April 2024.
This technical note accompanies the relevant draft legislation and explanatory note and should be read in conjunction with the accompanying technical note for new late payment penalties and interest harmonisation.
Source gov.uk
