HMRC have published a response to their consultation ‘Making Tax Digital: Tax administration’. 

The original consultation focused on changes to tax administration required to deliver Making Tax Digital (MTD), in particular the rules on penalties and interest.

In their response HMRC confirm that legislation will be included in Finance Bill 2017 to adapt HMRC’s existing compliance powers in time for the introduction of MTD. In particular:

  • HMRC will be able to enquire into end-of-year declarations, but not quarterly returns.
  • Taxpayer safeguards will be maintained under MTD, including review and appeal rights.
  • The usual enquiry time limits will apply.
  • If you complete a year-end declaration and submit a Self Assessment return there will only be one enquiry window. 

A further consultation will be published this spring on late payment penalties. In the meantime, HMRC have indicated that:

  • They favour a gradual ‘penalty points’ model where a penalty is only charged when a set level of points is reached.
  • There will be a ‘soft landing’ period of at least 12 months before taxpayers are charged late submission penalties under MTD.

There will also be further consultation this year on late payment interest and the alignment of the interest rules across taxes.


Making Tax Digital: Index

Discovery assessment and time limits

Adviser’s Tax Penalty Planner (subscribers)

HMRC’s consultation documents can be found here