Points-based penalty system preferred option

New rules for MTD penalties should be delayed until the project is up and running said the ICAEW.

Responding to HMRC’s consultation Making Tax Digital: sanctions for late submission and late payment which proposed three penalty models the institute prefers a points-based system that includes the option to suspend penalties.

The ICAEW agrees with the principles outlined in the consultation but said further thought should be given to the deadlines and related penalties.

It believes the penalty legislation should be delayed until at least Finance Bill 2019. Further there should be a soft-landing period of two years. The self-assessment late filing penalties could be applied to the final MTD declaration in the interim.

The Association of Taxation Technicians also favours the proposal to allow taxpayers a few occasions to avoid a penalty for a late quarterly MTD submission by allowing a short extension period. It suggests...