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TAX UPDATE: Taxpayers beware new late submission penalties

Tuesday 26 February 2019
TAX UPDATE: Taxpayers beware new late submission penalties

A new points-based penalty system is to be introduced by HMRC which will affect any taxpayer submitting a late return.  Agents, and others acting on behalf of taxpayers will also be affected because they will need to understand the new rules.

The most important point is that implementation will initially be for Income Tax Self-Assessment and VAT.  Corporation Tax is not included in the scope of the legislation.


It is the UK Government’s ambition to apply the new approach to Corporation Tax at some point in the future.

For now, taxpayers are required to submit tax returns by specified dates and when they submit their returns late, they generally incur a penalty. This new measure introduces a new points-based penalty regime for regular submission obligations.

Depending on the frequency of the return submission obligation, a defined number of penalty points will accrue to a threshold. Once this threshold has been reached, a fixed penalty will be charged to the taxpayer.

After this, each late submission will attract a fixed penalty, until the taxpayer meets all of their submission obligations by the relevant deadline for a set period of time. Points will generally have a lifetime of 24 months after which they expire. Taxpayers will have a separate points total for each submission obligation.

In respect of income tax self-assessment, the number of penalties issued are likely to reduce, as a monetary penalty will not be charged from the start. The fixed penalty is likely to be set at a higher rate than current penalties to reflect this, but unlike the current penalty regime there will be no escalation to daily or tax-geared penalties.

In respect of VAT however, the change is likely to increase the number of penalties for late submission. This is because the current Default Surcharge does not penalise late submission alone.

If you think these changes may affect you or you would like further information please contact our Tax Manager, Hannah Roynon-Jones: