Its being reported that HMRC are considering introducing a penalty points system for those that miss tax return deadlines for Income Tax, Class 4 NI Contributions, Corporation Tax, and VAT. So for example, rather than receiving an automatic £100 for missing the self assessment deadline, you could accrue points, triggering automatic fines when you rack up a high number.
The new system could see the introduction of quarterly self assessment tax returns, except for those earning less than £10,000 a year. These plans have proved to be controversial as many fear that it could create more opportunities for HMRC to issue fines, which would be issued if you reach a certain level of penalty points. However the proposed system could represent a more relaxed approach to those who are unintentionally late, giving them a chance to redeem themselves before they are fined. Points could then be set back to zero after two years of submitting all of your information on time.
These proposals are an integral part of HMRC’s strategy to make the tax system fully digital by 2020, which according to ICPA Chairman Tony Margaritelli ” Means that basically the accountant becomes the new bookkeeper.” As a result this becomes a bookkeeping issue, so rather than giving your accountant your financial information every December and January, you will need to supply this information at least four times a year for quarterly filing.”
The role of bookkeepers is evolving as the profession becomes more digitised, with an increasing number of bookkeepers submitting Tax and VAT returns, and gaining more qualifications. As a result, many small to medium sized businesses can see significant cost savings by developing a strong relationship with a local bookkeeper, who can work on or off site.
The consultation puts forward two competing models setting out penalties with different timescales and fines. The biggest fine mooted in one model is 15% of the outstanding bill, which would be charged if you were 12 months late in paying. Under this model you would be first charged a 4% fine for being 30 days late, and a 10% fine for being 6 months late. The current maximum for settling your tax bill 12 months late is 5% of the bill.
If you need help and advice to ensure that your Income Tax, Corporation Tax, National Insurance, or VAT Returns are filed on time, please use the CONTACT US facility on this website and we will be very pleased to help.