The Finance Act 2021 (Income Tax and Capital Gains Tax) (Penalties) (Appointed Day: Eligible Volunteers) Regulations, SI 2024/440, bring new penalty provisions into force for income tax and capital gains tax, for failures by ‘eligible volunteers’ to submit returns or pay tax on time, for 2024/25 onwards. ‘Eligible volunteers’ are those who have elected into the MTD for ITSA regime on a voluntary basis from 6 April 2024.
The regulations bring FA 2021 Schs 24–27 into force from that date for those specific purposes, meaning that the new, reformed late-submission and payment penalties apply for individuals who have elected into MTD for ITSA ahead of mandation in 2026. This was made possible by FA 2024 s 37 which allowed for the penalties to synchronise with those who signed up voluntarily.
Those schedules of FA 2021 establish a new points-based system of penalties for late returns, including where the taxpayer has deliberately withheld information from HMRC, and penalties for failure to pay the relevant amount of tax on time. This is a new harmonised system of penalties across multiple taxes, and was brought into effect for VAT purposes only from 1 January 2023. The regime is expected to come into force more widely for MTD for ITSA from the date businesses are mandated to join (starting from April 2026).
The Finance Act 2021 (Income Tax and Capital Gains Tax) (Penalties) (Appointed Day: Eligible Volunteers) Regulations, SI 2024/440, bring new penalty provisions into force for income tax and capital gains tax, for failures by ‘eligible volunteers’ to submit returns or pay tax on time, for 2024/25 onwards. ‘Eligible volunteers’ are those who have elected into the MTD for ITSA regime on a voluntary basis from 6 April 2024.
The regulations bring FA 2021 Schs 24–27 into force from that date for those specific purposes, meaning that the new, reformed late-submission and payment penalties apply for individuals who have elected into MTD for ITSA ahead of mandation in 2026. This was made possible by FA 2024 s 37 which allowed for the penalties to synchronise with those who signed up voluntarily.
Those schedules of FA 2021 establish a new points-based system of penalties for late returns, including where the taxpayer has deliberately withheld information from HMRC, and penalties for failure to pay the relevant amount of tax on time. This is a new harmonised system of penalties across multiple taxes, and was brought into effect for VAT purposes only from 1 January 2023. The regime is expected to come into force more widely for MTD for ITSA from the date businesses are mandated to join (starting from April 2026).
