DON’T FALL FOUL LATE PAYMENT PENALTIES

The government has increased the late payment penalties for taxpayers within its ‘Make Tax Digital’ (MTD) regime.

The rises, which cover VAT and income tax, came into effect this month, or whenever an individual or business joins the MTD regime in question.

And they come as figures reveal HMRC collected a quarter of a billion pounds in late penalties in just two years between 2021 and 2023.

The new rates are:
• Three per cent of the tax outstanding where tax is overdue by 15 days
• An additional three per cent where tax is overdue by 30 days
• Plus 10 per cent per annum where tax is overdue by more than 30 days

Also from this month, the late payment interest rate charged by HMRC will rise by 1.5 percentage points. It means most paying at the Bank of England rate plus four per cent.
And HMRC has revealed it is looking at the penalty framework that applies when a taxpayer makes a mistake in their tax return or other tax document or omits to reveal a circumstance that affects their liability.

More than a million taxpayers failed to meet the most recent self-assessment deadline on January 31, almost double the number in the previous year.

A HMRC spokesperson told the ‘This is Money’ website: “Our aim is to support taxpayers to get their tax right and avoid fines altogether, with the overwhelming majority of customers filing on time.

“We charge penalties to encourage customers to meet their obligations, while acting as a sanction for those who don’t.”

• To discuss any tax issues and any of the points raised in this article please contact me on 01772 430000