The Treasury has announced that it will be bringing in a points type system to replace the present fine for filing a late tax return, to enable the HMRC to concentrate further on serious tax avoidance.
Currently there is an immediate £100 fine for filing a late tax return, and this will be replaced by a driving licence-style points system. In the last tax year 840,000 people missed the 31st January deadline and were liable for the penalty fine.
The change will form part of a series of treasury reforms that will allow more focus on significant tax avoidance, rather than those late payers that have made a simple mistake.
The treasury document detailing the changes states that: “The government will reform the penalty system for late or missing tax returns, adopting a new points-based approach. It will also consult on whether to simplify and harmonise penalties and interest due on late payments and repayments.
“This will ensure that the system is fair, simple and effective across different taxes. Final decisions on both measures will be taken following this latter consultation.”
It continues: “If a customer achieves a sustained period of good compliance before a penalty is triggered, the points total will be reset to zero.
“A sustained period means that a number of submissions are provided on time for a set period.”
As it currently stands, you have to pay a £100 penalty if you do not file your Company Tax Return by the deadline and if it is late three times in a row, the penalty is increased to £500 each. The penalties then compound and increase the later the payment is made.