Two-tier system for HMRC penalties creates unfairness

The tax authority should speed up the implementation of the new self-assessment penalty regime says the Low Incomes Tax Reform Group (LITRG) after expressing concern that delays will leave some taxpayers paying substantially more for delays in filing their tax return on time.

In a new paper Self-assessment late filing penalties: improving fairness for unrepresented taxpayers LITRG sets out a series of interim steps that could be taken to smooth out the difference between the two regimes if early implementation is not possible.

The new regime is initially being rolled out to volunteers in making tax digital for income tax (MTD for ITSA). Taxpayers outside MTD for ITSA will continue under the current system as HMRC has been unable to put a timetable on the roll-out of the new regime for these taxpayers – citing IT limitations as the reason...