New penalty system applies to MTD for ITSA volunteers

HMRC has issued guidance on the new late-filing and late-payment penalties regime that will apply to taxpayers who sign up to making tax digital for income tax self-assessment (MTD for ITSA) on a voluntary basis.

Volunteers will need specifically to agree to the new penalties regime applying to them when they sign up to take part – agents are able to agree on behalf of clients.

Broadly the new late submission penalties are points-based. So taxpayers will not face financial penalties if they make a single mistake; they will apply only if the taxpayer persistently fails to meet their obligations. For each annual return a taxpayer submits late they will get a penalty point until they reach the penalty point threshold of two points. On reaching that threshold the taxpayer will receive a £200 penalty. Another £200 penalty will be imposed if the taxpayer...