Points-based model to be introduced in stages for documents submitted late

HMRC has confirmed it will adopt the points-based model in phases in its response to the consultation on late submission of returns. It is expected that the model will be implemented first for VAT starting in 2020 with other taxes following in stages. This will give taxpayers a year to become familiar with their new obligations after they become subject to Making Tax Digital for business.

In HMRC’s summary of the model a taxpayer would receive a point every time they failed to provide a submission on time. At a specified threshold – depending on the frequency of their submission obligations – a penalty would be charged. The points would be reset to zero after a period of good compliance. The aim would be to ensure that isolated failures do not attract a penalty and to reward improved reporting behaviour. There will be a maximum lifetime for...