Clarification needed on aspects of penalties for failure to pay tax regulations

The Chartered Institute of Taxation (CIOT) and Low Incomes Tax Reform Group (LITRG) have published their response to the draft legislation: Penalties for Failure to Pay Tax (Schedule 26 to the Finance Act 2021) (Assessments) Regulations 2024. These allow HMRC to raise a second late payment penalty when the outstanding tax had not been paid in full within a two-year period.

The CIOT and LITRG are concerned that while the draft regulations allow an assessment of the second late payment penalty to be made before the expiry of the two year time limit where the tax has not yet been paid the penalty itself cannot be calculated at this point as the further penalty period must be known - HMRC needs to know the date the tax has been paid to be able to work out and charge the amount of the penalty itself. They...