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Making Tax Digital – late submission and late payment sanctions

Making Tax Digital – late submission and late payment

Proposals for a points-based system of late submission penalties and a combination of one-off late payment penalties and penalty interest.


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The Government consulted in March 2017 on three alternative models for late submission penalties for businesses within the Making Tax Digital (MTD) regime. A response to this consultation has now been published and the Government intends to bring forward legislation for a points-based system of penalties (a modified version of Model A in the March consultation). The Government has also published a consultation on simplified interest and late payment penalties, and it is intended “to take forward both elements as a coherent package”.

In terms of the points-based system of penalties for late submission, no further consultation is being carried out at this stage but draft legislation and a technical note will be issued for consultation in Summer 2018. The first implementation of the late submission penalties will be in 2020 for MTD VAT obligations, following a ‘soft-landing’ period of 12 months after the introduction of MTD for VAT.

For late payment, a consultation document has been issued but no changes to the existing rules on late payment interest are proposed. A penalty of five percent of tax unpaid at the due date is suggested, which would become payable after 30 days (with the potential for the penalty to be reduced or eliminated if the tax is paid, or time to pay has been agreed, within that time). Further penalties would accrue after 30 days. Comments are invited on these proposals and the closing date is 2 March 2018.

For further information please contact:

Mandy Pearson

Stephen Whitehead

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