Self assessment penalties ‘to be replaced with new points-based system’

The £100 penalty for filing a late tax return could be scrapped and replaced with a new driving licence-style points system, HMRC has revealed.

04 Dec 2017

The £100 penalty for filing a late tax return could be scrapped and replaced with a new driving licence-style points system, HMRC has revealed.

Under new plans being considered by the tax authority, taxpayers who miss the self assessment filing deadline could receive points instead of an immediate fine.

Only those taxpayers accruing too many points would then be penalised. Individuals would also see points wiped from their record after a set period of time.

The new ‘holistic’ approach is intended to focus on taxpayers who persistently break the rules rather than those who make genuine errors of judgement.

The proposals are included in the Treasury’s Red Book, which states: ‘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.’

Under the current system, taxpayers who fail to submit their tax return by the 31 January deadline are liable to an instant £100 fine, with further penalties applying for prolonged delays.

It is thought that around 840,000 taxpayers missed the filing deadline in the last tax year.

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