New penalty regime for late returns on the starting blocks

As expected, new penalty arrangements for late returns and late payments of tax will be legislated for in Finance Bill 2009. The new penalties have been the subject of extensive consultation, and HMRC even undertook some independent research into taxpayer behaviour with regard to late filing.

The new system will abolish the “capping” process used in relation to late filing penalties for self assessment returns, but will retain the principle of “reasonable excuse”.