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Measures for new penalties for late payment of Corporation Tax, Income Tax, Capital Gains Tax, and VAT as well as new measures to change VAT repayment interest rules so that they more closely align to the rules for Income Tax Self-Assessment and Corporation Tax which have been dropped from Finance Bill 2019 will be included in a future Finance Bill.

Normal VAT penalty rules, will to MVD apply until at least 2021.

See Penalties (VAT) subscriber guide

Interest harmonisation: VAT

Alongside the original draft legislation, HMRC published a policy paper, ‘Interest harmonisation and sanctions for late payment’ and a consultation response summary in respect of the proposed changes.

It is not expected that the changes will commence any earlier than April 2021.

This will replace the Repayment supplement regime.

Late payment penalties: Corporation Tax, Income Tax, Capital Gains Tax, and VAT

The proposed measures will replace the existing schedule 55 FA 2009 Late Payment penalty rules

The legislation will be included in a future Finance Bill and commence from an unspecified date, expected to be no earlier than 2021.

Provisions are in place to allow for a Reasonable excuse, for the usual Appeals procedure, and to ensure there is no ‘double jeopardy’ where the taxpayer has been subject to a conviction for an offence.

The proposed legislation follows HMRC’s December 2017 consultation, ‘Making Tax Digital: interest harmonisation and sanctions for late payment’ and was released on the same day as the consultation outcome, ‘Making Tax Digital: interest harmonisation and sanctions for late payment – summary of responses’.

The respondents were broadly in favour of the suggested changes, but as a result of comments made HMRC updated their proposals to ensure:

The policy documents and draft legislation can be read in full here. The consultation response is here.

Links

Making Tax Digital: index

VAT Reclaims and unjust enrichment

Penalties (VAT)

Penalties: Late Payment

MTD: late payment penalties further consultation


 

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