UK: Consultation Opens for Proposed Penalties on Late Tax Payments

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The HM Revenue and Customs (HMRC) has initiated a technical consultation on the proposed new penalties for failure to pay tax, as outlined in the Schedule 26 to the Finance Act 2021 (Assessments) Regulations 2024. The consultation, set to conclude on June 10, 2024, seeks input on regulations pertaining to the reformed penalty system for late payment of tax.


The draft regulations aim to address concerns related to late tax payments by introducing proportional penalties based on the duration of outstanding tax amounts. Under the proposed system, the longer the delay in payment, the higher the penalty incurred by the taxpayer.


The reformed penalty system, which commenced for VAT taxpayers in January 2023 and for Income Tax Self-Assessment taxpayers participating in the Making Tax Digital service in April 2024, aims to ensure fairness and certainty in penalty assessments. Notably, the proposed regulations grant HMRC the authority to assess and charge the second late payment penalty once, even if the outstanding tax has not been fully paid, towards the end of a two-year assessment time limit. This legislative change is intended to prevent taxpayers from intentionally avoiding penalties by delaying tax payments until the end of the time limit.


The consultation anticipates engagement from tax and accounting bodies, as well as taxpayers, who are likely to be impacted by the proposed regulations.



Source: gov.uk

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