Repeat late tax return culprits to be hit with bigger fines

PEOPLE who file their tax returns late on a one-off basis are set to escape the £100 penalty, while repeat offenders will be hit with heavier fines, it was announced yesterday.

A shake-up of the rules to make them “fairer and more consistent” was unveiled in the Budget. The new system will be introduced for VAT taxpayers from 2022, and for those filing income tax self-assessments from 2023.

It will distinguish between people who make an occasional slip-up and the small minority who repeatedly miss deadlines to submit their tax returns or pay the tax they owe.

The Budget Red Book said: “The new late submission regime will be pointsbased, and a financial penalty will only

be issued when the relevant threshold is reached. The new late-payment regime will introduce penalties proportionate to the amount of tax owed and how late the tax due is.”

At present, the penalties and interest levied on late submissions and payments are inconsistent, which officials have deemed confusing for taxpayers.

The Government will legislate in the Finance Bill 2021 planned for later this year, having first consulted on the proposal in 2015.

The tax penalty reform is forecast to raise £5 million in 2022-23, then £90 million in 2023-24, and £155 million in 2024-25 and 2025-26.

It is one of a series of measures unveiled in the Budget that are designed to crack down on tax avoidance, evasion and non-compliance.

The Government will introduce new powers to make the possession, manufacture, distribution and promotion of “electronic sales suppression” software and hardware an offence.

The measure is forecast to raise £5million in 2021-22, then £20million a year from 2022/23 onwards.

The Government will also invest a further £180million in 2021-21 in additional resources and new technology for HMRC.