ATT Urges HMRC to Soften Proposed MTD Payment Penalties

The Association of Taxation Technicians (ATT) has asked HMRC to soften its proposed penalties for late quarterly submissions and payments made through the Making Tax Digital (MTD) system. MTD will be rolled out beginning on the 6th of April 2018

HMRC held a consultation on proposals for sanctions under MTD. HMRC plans to charge an additional penalty rate of interest in addition to the regular rate for late payment, on the basis that these two charges have distinct functions.

The ATT responded to this and stated that they disagree with this and believe these penalties should be combined. They explained that because both charges relate to the late payment of tax, taxpayers would not see a difference. The ATT also suggests the penalty rate should apply after 30 days instead of the 14 days proposed by HMRC.

However, the ATT did express support for one aspect of HMRC’s proposed model.  They say they will give taxpayers a short extension to the MTD submission deadline, allowing them to avoid penalties.

Taxpayers should be allowed to experience an entire MTD cycle before penalties come into effect according to the ATT.

In addition to HMRC’s current proposals, the ATT suggested discounted penalties and a limited shelf life for recording extensions. The ATT further outlined possible changes to HMRC’s ‘points-based-model’ which would make it fairer. They did, however, acknowledge that it would be a complex process.