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HMRC is consulting on draft regulations which will update the new late payment penalty rules set out in FA 2021, Sch 26.
The draft Penalties for Failure to Pay Tax (Schedule 26 to the Finance Act 2021) (Assessments) Regulations 2024 allow HMRC to assess and charge the second late payment penalty once, where the outstanding tax has not been paid in full, towards the end of the two year time limit.
Currently, HMRC can assess the second penalty when the amount of outstanding tax is paid in full, within a two-year time limit. The two-year period will still apply, but the change removes the potential avoidance opportunity where taxpayers try to avoid the penalty by not paying the tax before the end of that period (and where HMRC would then be out of time).
