Consultation on making tax digital sanctions for late submission and late payment

27 March 2017

Making tax digital: sanctions for late submission and late payment is open for response until 11 June 2017. The consultation seeks views on 3 possible models for late submission penalties and provides an update on penalty interest.

Full details are available within the consultation paper however in brief the 3 possible models include:

Model A: Points-based penalty - under this model the customer would incur a point each time they failed to provide a submission on time. When the points reach a certain threshold they would become liable to a penalty.

Model B: Regular review of compliance - under this model HMRC would carry out an automated review that looked at the customer’s compliance with their submission obligations after a set period of time and would take into consideration the number of failures when calculating the amount of any penalty that is charged at the time of the review. Because the review is periodic in nature it could also take account of the duration of failures. The review would be carried out tax by tax.

Model C: Suspension of penalties - This model gives the customer the opportunity to avoid having to pay a penalty by providing a late submission.

To read full details and see the illustrations for each of these models please access the consultation paper.

In their Summary of Responses to last year’s Making Tax Digital: Tax Administration consultation, the government committed to getting the late submission model right and recognised that more work needed to be done. The government also stated that people will be given at least a year to get use to a new penalty regime in relation to their Making Tax Digital for Business obligations.

Whilst the proposals for late submission penalties have been developed with the new Making Tax Digital for Business obligations in mind, the consultation also explores the suitability of the sanctions for other regular submission obligations such as for Corporation Tax, Income Tax and VAT.