Making Tax Digital: late-payment penalty anomaly corrected

As reported last week regulations are required to address a potential gap in the legislation which introduced late-payment penalties under the harmonised penalty regime for Making Tax Digital. With the relevant empowering provisions now in force (having been activated by the Finance Act 2021 (Schedule 26 Second Penalty Assessments) (Appointed Day: Regulation Making Power) Regulations SI 2024/1132) HMRC have been able to make the necessary secondary legislation.

The Penalties for Failure to Pay Tax (Schedule 26 to the Finance Act 2021) (Assessments) Regulations SI 2024/1153 correct the anomaly in the FA 2021 Sch 26 penalties provisions which otherwise would have left open the possibility of avoidance of the second late-payment penalty by simply not paying the outstanding tax by the end of the two-year assessment period. The Regulations enable HMRC to assess the penalty before the outstanding tax has been paid in full. The...