HMRC announces Making Tax Digital sanctions consultation

Date Published: March 23, 2017

Category: Digital Tax Accounts, HMRC News, Making Tax Digital

Making Tax Digital Proposed SanctionsAs HMRC continues with its preparations for Making Tax Digital (MTD), it released this week a consultation paper on what sanctions late submission and late payment should incur.


The first tranche of businesses to comply with MTD will do so from April 2018.  These businesses are those with profits chargeable to Income Tax and who pay Class 4 National Insurance contributions (NICs) and have turnovers in excess of the VAT threshold.


Three Making Tax Digital sanction models proposed

HMRC is proposing 3 possible models for late-submission penalties:


  • Model A – A points-based penalty system, which is a revision of the model proposed in the last consultation. The revision now proposes a system which is applied tax by tax, and which awards one point for every failure. When the number of points reaches a certain threshold the customer would become liable for a penalty.


  • Model B – A system based on regular review of compliance – here HMRC proposes carrying out an automated review that looks at the customer’s compliance with their submission obligations after a set period of time and takes into consideration the number of failures when calculating the amount of any penalty that is charged at the time of the review.


  • Model C – Suspension of penalties. This model gives the customer the opportunity to avoid having to pay a penalty by providing a late submission. When the first failure occurs the customer would receive a notice advising them that they did not provide the submission on time and are liable to a penalty, but HMRC would not charge it on condition that they provide the outstanding submission within a specified time. If the condition was not met the penalty would be charged.


Read the Making Tax Digital sanctions consultation document

There are more details about each model in HMRC’s consultation document:

Making Tax Digital – sanctions for late submission and late payment


The consultation is open till 11 June 2017 and HMRC are keen to gain feedback from anyone affected by or interested in the proposed MTD sanction proposals, including individuals, businesses, agents and professional bodies.


Have your say

We would particularly encourage all Agents and Businesses to use this opportunity to share their feedback and views.  Email your views to or write to HM Revenue and Customs, Making Tax Digital –Tax Administration, Room 1C/06, 100 Parliament Street, London, SW1A 2BQ


Remember, whilst the MTD rollout schedule has been set, there are still ways to try and shape how Digital Tax Accounts will impact on businesses and individuals.  Use this opportunity to influence how the sanction system for MTD compliance problems will work.


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