Is this some kind of late April fool's day joke?

New penalty regime to apply to taxpayers testing making tax digital

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See here for ICAEW's overview and here for HMRC's guidance.

Replies (12)

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By Paul Crowley
12th Apr 2024 17:05

Only an idiot would now volunteer.
I read the article and honestly thought that someone had misread or misunderstood.
https://www.accountingweb.co.uk/tax/hmrc-policy/guidance-issued-on-penal...

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Replying to Paul Crowley:
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By David Ex
12th Apr 2024 17:17

Paul Crowley wrote:

Only an idiot would now volunteer.

That also works if you remove the word “now”!

At least they’re clear about where this is heading.

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By Jane Wanless
12th Apr 2024 17:16

I hope it is a late April Fool joke.
Who in their right mind would volunteer to spend hours testing HMRC's new system for them and in doing so increase their penalty risk?
And which accountant will sign up their client for a penalty regime? Too much risk of a client saying it wasn't clearly explained and will the accountant therefore pay the penalty.

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DougScott
By Dougscott
12th Apr 2024 17:22

Shouldn't HMRC be paying us and our clients to test the system for them? That's the thing with HMRC, always take, take, take.....

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By FactChecker
12th Apr 2024 17:31

It's actually more insidious than it first looks (and so is an active deterrent to signing-up for the Pilot - although none of course is needed anyway).

On the 'plus side' (or at least 'not as negative as it looks side'), the penalties won't be incurred for late filing of the QUs (during the Pilot).
BUT if you are, for instance, late with your 2nd Pilot EoY (or whatever it's called by then), then your personal 'penalty clock' will have been started ... meaning that if you are late again *anytime in the next 2 years* then the penalties will start piling up.

So someone who was 'helping out' by being in the Pilot may be penalised for a late EoY return for 2026-27 ... whereas someone else in the same position (but who didn't take part in the Pilot) won't be penalised!
Go figure if HMRC are capable of thinking things through ...

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VAT
By Jason Croke
12th Apr 2024 17:49

That is the strangest thing I have read so far this year.

I appreciate that HMRC don't want people signing up as testers just as a means to avoid having to pay tax on time "oh, I am a tester and I have had trouble with the new system and now my return is 6 months late so can i have a free pass and no penalty please".

But HMRC had a 12 month soft touch for MTD VAT where late returns incurred penalties but could be appealed due to "IT issues".

Doubt there would be that many wanting to be testers simply to game the system and avoid a late filing scenario, surely what with HMRC's much advertised "digitisation", there would be an automated method to give testers a little bit of leeway.

Maybe HMRC don't want MTD ITSA to work and are kicking the can down the road with the argument they need more time to test due to lack of testers. If HMRC don;t have faith in their own product or their own testing phase, then what hoe the rest of us?

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RLI
By lionofludesch
12th Apr 2024 18:20

I'm beginning to think that all Government organisations are run by half-wits.

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Replying to lionofludesch:
RLI
By lionofludesch
12th Apr 2024 18:21

lionofludesch wrote:

I'm beginning to think that all Government organisations are run by half-wits.

That's not true - I've thought it for a long time.

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Replying to lionofludesch:
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By bernard michael
13th Apr 2024 09:31

lionofludesch wrote:

I'm beginning to think that all Government organisations are run by half-wits.

50% is a bit generous what about minuscule-wits or should that be twits

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By I'msorryIhaven'taclue
12th Apr 2024 22:01

The late payment penalties are disproportionate at https://www.gov.uk/guidance/penalties-for-income-tax-self-assessment-vol... viz:

First offence
Payment between 16 and 30 days overdue: Calculated at 2% on the tax you owe at day 15;

followed by a similar 2% penalty at day 31

Second offence
Calculated at a daily rate of 4% per year on the outstanding balance

Which sounds rather like a cheap overdraft facility. Why pay the VATman with your bank overdraft facilty @bank % when you could take advantage of HMRC's 4% pa overdraft facility.

Just saying. Trying to develop discussion. I'm sure there'll be more to it, but based on my cursory speed-read there's a sound case for people existing on plastic and Wonga Bank overdrafts to volunteer and rack up a VAT tab @4% annual interest.

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Replying to I'msorryIhaven'taclue:
RLI
By lionofludesch
12th Apr 2024 22:39

I'msorryIhaven'taclue wrote:

The late payment penalties are disproportionate at https://www.gov.uk/guidance/penalties-for-income-tax-self-assessment-vol... viz:

First offence
Payment between 16 and 30 days overdue: Calculated at 2% on the tax you owe at day 15;

followed by a similar 2% penalty at day 31

Second offence
Calculated at a daily rate of 4% per year on the outstanding balance

Which sounds rather like a cheap overdraft facility. Why pay the VATman with your bank overdraft facilty @bank % when you could take advantage of HMRC's 4% pa overdraft facility.

Just saying. Trying to develop discussion. I'm sure there'll be more to it, but based on my cursory speed-read there's a sound case for people existing on plastic and Wonga Bank overdrafts to volunteer and rack up a VAT tab @4% annual interest.

2% after a fortnight is a lot more than 4% per annum.

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Replying to I'msorryIhaven'taclue:
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By Paul Crowley
13th Apr 2024 01:50

There is interest as well as the penalty.

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