skip to navigationskip to main content

Our services

Request a callback

Get in touch

HMRC’s new late submission points system: here’s how it works

HMRC’s new late submission points system: here’s how it works

HM Revenue & Customs may be looking into overhauling a number of tax areas post the Covid 19 pandemic. Tax penalties are no exception. The new system aims to punish repeat offenders and be more lenient towards those who make the odd mistake.

Penalties will be points-based rather than automatic. This means that those who consistently miss deadlines will accrue more points – and pay a larger fine than what’s in force currently.

All change for the tax penalty regime

The new measure will affect those who are required to submit a VAT return and/or tax return (ITSA) and who do not submit their returns on time or pay on time.

Currently, income tax has a flat late claim penalty of £100 (increasing by £10 a day after three months and up to £300 or 5% of your tax liability (whichever is greater) subject to the case of arrears in the testimony for 6 months after the deadline and again after 12 months) regardless of the history of “offences”, but all this is to change (if the vote is given in parliament) to a point system. For VAT, there is currently no separate penalty for late filing.


Late submission penalties

When the taxpayer exceeds the application deadline, they will receive a point. Points are charged separately for VAT and ITSA.

The taxpayer is subject to a fixed financial penalty of £200 only after reaching the point threshold. Individual accrued penalty points automatically expire after 24 months, provided the taxpayer remains below the score threshold. After reaching the point threshold, all points will expire after the taxpayer has fulfilled the obligation to return for a specified period based on the frequency of their submission.

If the taxpayer continues to exceed the application deadlines after reaching the score threshold and is fined, he will be subject to another fixed-rate penalty for each additional obligation not fulfilled. This is true even if they have paid a fixed fine.

As with other tax penalties, a taxpayer will not be subject to a penalty or fine if he has a reasonable excuse for not submitting a request on time and has the right to appeal against points and penalties.

Late payment penalties

There is no penalty if the taxpayer pays the tax late, but within 15 days of the due date.

The first penalty is 2% of the outstanding amount if they pay between 16 and 30 days after the due date.

It is set at 4% of the outstanding amount if the tax has not been paid 30 days after the due date.

The second penalty for late payment is 4% per annum, calculated daily on the total unpaid tax from the 31st day.

To avoid penalty or penalties, the taxpayer will have to pay or approach HMRC to agree on a repayment time.

How APH Accountants can help

Please contact us if you need further advice, have any questions about our services, or find out more about he changes on the GOV website here

Subscribe to our newsletter

Our monthly newsletter contains a round up of the latest tax news and updates of what's happening at APH Accountants Ltd

As a subscriber you will automatically receive our newsletter direct to your inbox

Please read our Privacy Policy before signing up