Penalties on the way...

As with the existing penalty regime, there will be a ‘reasonable excuse’ get-out, but like the current system, inability to pay and reliance on a third party are not reasonable excuses.

The first charge will be payable as per the above table.

A second charge will also become payable and will be calculated on amounts outstanding from day 31 after the payment due date until the outstanding balance is paid in full. Any TTP (Time to Pay arrangement) agreed during this period will also result in future penalties being suspended from the date the TTP was agreed.

In a statement explaining the thinking behind the new system, HMRC said, “The changes will ensure that people who pay late can avoid a penalty if they take action to make arrangements to pay, and that those that do not will receive a penalty that is proportionate to both the value of the debt and the amount of time it is outstanding for. The measure is designed to encourage those who cannot pay to agree a Time to Pay (TTP) arrangement as quickly as possible and only penalise those who do not.”