HMRC OUTLINES CHANGES TO LATE PAYMENT PENALTY REGIME

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HMRC has published a policy paper outlining the forthcoming changes to the penalties for late payment and interest harmonisation for taxpayers.

The government intends to reform sanctions for late submission and late payments to make them ‘fairer and more consistent across taxes’. Initially the changes will apply to VAT and Income Tax Self Assessment (ITSA).

The changes will see interest charges and repayment interest harmonised to bring VAT in line with other tax regimes, including ITSA.

Under the new regime, there are two late payment penalties that may apply: a first penalty and then an additional or second penalty, with an annualised penalty rate. All taxpayers, regardless of the tax regime, have a legal obligation to pay their tax by the due date for that tax. The taxpayer will not incur a penalty if the outstanding tax is paid within the first 15 days after the due date. If tax remains unpaid after day 15, the taxpayer incurs the first penalty.

This penalty is set at 2% of the tax outstanding after day 15.

If any of the tax is still unpaid after day 30 the penalty will be calculated at 2% of the tax outstanding after day 15 plus 2% of the tax outstanding after day 30. If tax remains unpaid on day 31 the taxpayer will begin to incur an additional penalty on the tax remaining outstanding. This will accrue at 4% per annum.

HMRC will offer taxpayers the option of requesting a Time To Pay arrangement which will enable a taxpayer to stop a penalty from accruing by approaching HMRC and agreeing a schedule for paying their outstanding tax.

For VAT taxpayers, the reforms take effect from VAT periods starting on or after 1 April 2022. The changes will take effect for taxpayers in ITSA from accounting periods beginning on or after 6 April 2023 for those with business or property income over £10,000 per year (that is, taxpayers who are required to submit digital quarterly updates through Making Tax Digital for ITSA).

For all other ITSA taxpayers, the reforms will take effect from accounting periods beginning on or after 6 April 2024.

Internet link: GOV.UK

EMPLOYERS ‘NAMED AND SHAMED’ FOR PAYING LESS THAN MINIMUM WAGE

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The government has ‘named and shamed’ 191 companies that have broken National Minimum Wage (NMW) laws.

Following investigations by HMRC, the named firms have been fined for owing £2.1 million to over 34,000 workers. The breaches took place between 2011 and 2018. Named employers have since been made to pay back what they owed to employees and were fined an additional £3.2 million.

According to HMRC, 47% of firms wrongly deducted pay from workers’ wages, including for uniforms and expenses. In addition, 30% failed to pay workers for all the time they had worked, such as when they worked overtime, while 19% paid the incorrect apprenticeship rate.

Business Minister Paul Scully said:

‘Our minimum wage laws are there to ensure a fair day’s work gets a fair day’s pay – it is unacceptable for any company to come up short.

‘All employers, including those on this list, need to pay workers properly.

‘This government will continue to protect workers’ rights vigilantly, and employers that short-change workers won’t get off lightly.’

Internet link: GOV.UK

HMRC URGES TAXPAYERS TO STAY ALERT TO DIGITAL SCAMS

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HMRC has urged taxpayers to stay alert to the threat of digital scams and scammers claiming to represent HMRC.

Research published by HMRC revealed that the number of tax-related scams has doubled in the past 12 months.

In the past year HMRC has received more than one million referrals from the UK public in regard to suspicious contact, with many fraudsters offering ‘tax refunds’ or ‘rebates’. The research showed that HMRC received 441,954 reports of phone scams and more than 13,315 reports of malicious websites.

HMRC also stated that, over the last year, it has asked internet providers to take down 441 coronavirus (COVID-19) support scheme scam webpages.

Mike Fell, Head of Cyber Security Operation at HMRC, said:

‘The pandemic has given criminals a fresh hook for their activity and we’ve detected more than 460 COVID financial support scams alone since early 2020.

‘HMRC takes a proactive approach to protecting the public from tax-related scams and we have a dedicated Customer Protection Team that works continuously to identify and close them down.’

Internet link: ICAEW