ATT urges HMRC to soften proposed MTD sanctions

HMRC has proposed sanctions for late quarterly submissions and payments made through the Making Tax Digital (MTD) system, which the Association of Taxation Technicians (ATT) has asked them to consider making more lenient.

HMRC held a consultation on proposals for sanctions under MTD, which will be rolled out beginning on the 6th of April 2018. HMRC plans to charge an additional penalty rate of interest alongside the regular rate for late payment, on the basis that these two charges have distinct functions.

The ATT responded to the consultation, stating that they disagree with this because they believe that these penalties should be combined into one charge. The ATT explained that because both charges relate to the late payment of tax, taxpayers would not see a difference between them. The ATT also argued that the penalty rate should not apply after 14 days, as proposed by HMRC, but after 30 days.

However, the ATT did express support for HMRC’s proposed model which would give taxpayers a short extension to the MTD submission deadline, allowing them to avoid a penalty for late quarterly submissions.

The ATT believes taxpayers should be allowed to experience an entire MTD cycle before penalties come into effect.

In addition to HMRC’s current proposals, the ATT also suggested discounted penalties, as well as a limited shelf life for the recording of extensions. The ATT further outlined potential changes to HMRC’s ‘points-based-model’ which would make it fairer, but acknowledged that it would be a complex process.