HMRC is consulting until 2 March 2018 on options for aligning late payment interest and penalties across VAT, income tax self-assessment and corporation tax. This takes account of responses to the earlier consultation on sanctions for late submission under the MTD regime. HMRC proposes a hybrid model for late payment penalties, to include a charge at 5% of the tax due, plus an additional element charged in an ‘interest’ type calculation.
This new model would:
allow 15 days from the due date to pay or arrange ‘time-to-pay’ without penalty;
allow up to 30 days to pay or arrange ‘time-to-pay’ with a halved penalty; and
after 30 days, the first penalty charge would become immediately payable on tax outstanding, with an additional penalty, calculated in a similar way to interest, becoming payable after full payment is made.
To avoid double counting, there would be no second addition of the base rate used in the formula to calculate the second penalty charge.
The repayment interest 30-day rule would be removed, and late submission of returns would no longer prevent repayment interest. The CT instalments interest rate would be retained.
HMRC is consulting until 2 March 2018 on options for aligning late payment interest and penalties across VAT, income tax self-assessment and corporation tax. This takes account of responses to the earlier consultation on sanctions for late submission under the MTD regime. HMRC proposes a hybrid model for late payment penalties, to include a charge at 5% of the tax due, plus an additional element charged in an ‘interest’ type calculation.
This new model would:
allow 15 days from the due date to pay or arrange ‘time-to-pay’ without penalty;
allow up to 30 days to pay or arrange ‘time-to-pay’ with a halved penalty; and
after 30 days, the first penalty charge would become immediately payable on tax outstanding, with an additional penalty, calculated in a similar way to interest, becoming payable after full payment is made.
To avoid double counting, there would be no second addition of the base rate used in the formula to calculate the second penalty charge.
The repayment interest 30-day rule would be removed, and late submission of returns would no longer prevent repayment interest. The CT instalments interest rate would be retained.
