23 Jul 2018
The World Cup may be over, but we’re still discussing penalties here in the accounting world! It may not seem as exciting as sporting penalties to the masses, but it’s tax penalties that excite us accountants! So, what kind of penalty are we all nattering about? Well, it’s the penalty points system HMRC in place for the Making Tax Digital (MTD) scheme, of course.
While the subject of the HMRC penalty system has fluttered around the accounting world since late 2017, it’s come to the attention of tax campaigners that some tax payers may fail to understand the model altogether. And with the MTD scheme only around the corner, we thought we’d clarify a few things for you.
So, where do we start? Let’s begin with introducing the new penalty system. Ahead of the new Making Tax Digital scheme, HMRC have introduced a ‘penalty points’ system for self-assessment tax returns that are submitted after the deadline.
HMRC have outlined that customers who fail to submit or meet a deadline will receive a point each time they are late. A penalty will be charged at a certain threshold – this all depends on the frequency of their submission obligations. Once the customer has reached the threshold a penalty will be given to them for every subsequent submission failure.
Still with us? Let’s take a look at the model:
Penalty point model
Annual submissions: 2 points
Quarterly submissions: 4 points
Monthly submissions: 5 points
There is a shelf-life and so penalty points will expire if there is a period of good compliance.
Annual submissions: 2 submissions
Quarterly submissions: 4 submissions
Monthly submissions: 6 submissions
But fear not… penalties and fines are appealable; however, whilst we do not encourage tardiness, we understand that every once in a while it’s easy to slip up. That’s why you should hire N S Accounts & Technology to do your accounts (naturally!) so you never miss a deadline and don’t get a telling off by HMRC.
HMRC experts are expecting the points model to commence from April 2020, twelve months ahead of the full introduction of Making Tax Digital so that customers are able to fully understand and apply the new system.
For more information or if you have any queries please contact us on 02920 647787 or email us at firstname.lastname@example.org.