In this month’s Enews we consider HMRC’s changes to late payment penalties; the consultation on how
digital marketplaces should collect and share information; and warnings over stamp duty refund claims.
With guidance on digital tax scams, national minimum wage penalties and the latest advisory fuel rates, there
is a lot to update you on.
HMRC outlines changes to late payment penalty regime
HMRC has published a policy paper outlining the forthcoming changes to the penalties for late payment and
interest harmonisation for taxpayers.
The government intends to reform sanctions for late submission and late payments to make them ‘fairer and more
consistent across taxes’. Initially the changes will apply to VAT and Income Tax Self Assessment (ITSA).
The changes will see interest charges and repayment interest harmonised to bring VAT in line with other tax
regimes, including ITSA.
Under the new regime, there are two late payment penalties that may apply: a first penalty and then an
additional or second penalty, with an annualised penalty rate. All taxpayers, regardless of the tax regime,
have a legal obligation to pay their tax by the due date for that tax. The taxpayer will not incur a penalty if
the outstanding tax is paid within the first 15 days after the due date. If tax remains unpaid after day 15,
the taxpayer incurs the first penalty.
This penalty is set at 2% of the tax outstanding after day 15.
If any of the tax is still unpaid after day 30 the penalty will be calculated at 2% of the tax outstanding
after day 15 plus 2% of the tax outstanding after day 30. If tax remains unpaid on day 31 the taxpayer will
begin to incur an additional penalty on the tax remaining outstanding. This will accrue at 4% per annum.
HMRC will offer taxpayers the option of requesting a Time To Pay arrangement which will enable a taxpayer to
stop a penalty from accruing by approaching HMRC and agreeing a schedule for paying their outstanding tax.
For VAT taxpayers, the reforms take effect from VAT periods starting on or after 1 April 2022. The changes will
take effect for taxpayers in ITSA from accounting periods beginning on or after 6 April 2023 for those with
business or property income over £10,000 per year (that is, taxpayers who are required to submit digital
quarterly updates through Making Tax Digital for ITSA).
For all other ITSA taxpayers, the reforms will take effect from accounting periods beginning on or after 6
Internet link: GOV.UK
Digital marketplaces to report sellers’ incomes from 2023
HMRC has published a consultation that outlines plans to implement reporting rules for digital platforms first
put forward by the Organisation for Economic Co-operation and Development (OECD).
In February 2020, the OECD consulted on proposed rules setting out how digital platforms should collect
information about the income of sellers and report it to tax authorities.
Under the new rules, websites and applications based in the UK will be required to report sellers’ income
arising in the previous calendar year to HMRC. The reporting deadline will be 31 January of the year following
the calendar year.
HMRC stated that the new rules will improve international co-operation in regard to the exchange of information
for tax purposes. They will also allow HMRC to access data from platforms based outside the UK quickly and
efficiently, which should encourage compliance and increase the visibility of transactions.
The rules will also help taxpayers to get their tax right and will assist HMRC in detecting and tackling tax
HMRC’s consultation will close on 22 October 2021.
Internet links: GOV.UK
CIOT warns over stamp duty refund claims
The CIOT has warned that some claims being made by firms offering help with Stamp Duty Land Tax (SDLT) refunds
are too good to be true.
The CIOT says an increasing number of firms are contacting buyers of properties after completion of a purchase,
suggesting that SDLT has been overpaid.
The most common issues raised are that multiple-dwellings relief (MDR) has not been claimed or that the
buyer could have paid non-residential rates of SDLT (which are generally lower than residential rates) because
the property was a mixture of residential and non-residential land.
The CIOT said:
‘SDLT is complicated and sometimes reliefs are overlooked, so it can be worth revisiting transactions if a
letter is received.
‘However, many unsolicited approaches are indeed too good to be true and responsible taxpayers should act
with caution and check independently whether a refund is due.
‘The suggested fee arrangements can also seem attractive as it appears that the claims are made on a ‘no
win no fee’ basis. But it is important to remember that receiving a refund is not necessarily a win as HMRC may
revisit the claim and deny that it was valid. In these circumstances, the fee may already have been paid.’
Internet link: CIOT website
Contactless limit to increase to £100 from 15 October
The national roll-out of the new £100 spending limit for contactless card payments will begin from 15 October
2021, banking trade body UK Finance has confirmed.
The decision to raise the contactless limit from £45 to £100 was made by HM Treasury and the Financial Conduct
Authority (FCA) following a public consultation and discussions with both the retail and banking sectors. It
follows on from the successful increase in the limit from £30 to £45 in April 2020.
From 15 October 2021, consumers will start to see retailers accepting contactless payments up to the new £100
limit, which will give customers more flexibility when shopping in store.
David Postings, Chief Executive of UK Finance, said:
‘Contactless payment has proved very popular with consumers and an increasing number of transactions are
being made using contactless technology.
‘The increase in the limit to £100 will allow people to pay for higher value transactions like their weekly
shop or filling up their car with fuel. The payments industry has worked hard to put in place the
infrastructure to enable retailers to update their payments systems so they can start to offer their customers
this new higher limit.’
Internet link: UK Finance website
HMRC urges taxpayers to stay alert to digital scams
HMRC has urged taxpayers to stay alert to the threat of digital scams and scammers claiming to represent HMRC.
Research published by HMRC revealed that the number of tax-related scams has doubled in the past 12 months.
In the past year HMRC has received more than one million referrals from the UK public in regard to suspicious
contact, with many fraudsters offering ‘tax refunds’ or ‘rebates’. The research showed that HMRC received
441,954 reports of phone scams and more than 13,315 reports of malicious websites.
HMRC also stated that, over the last year, it has asked internet providers to take down 441 coronavirus
(COVID-19) support scheme scam webpages.
Mike Fell, Head of Cyber Security Operation at HMRC, said:
‘The pandemic has given criminals a fresh hook for their activity and we’ve detected more than 460 COVID
financial support scams alone since early 2020.
‘HMRC takes a proactive approach to protecting the public from tax-related scams and we have a dedicated
Customer Protection Team that works continuously to identify and close them down.’
Internet link: ICAEW website
BCC calls for government to extend skills training
The BCC has urged the government to extend skills training in light of the publication of research which showed
that one in five companies are considering making redundancies as a result of the coronavirus (COVID-19)
The BCC has stressed concerns that older workers could go unutilised unless support for retraining is put into
The BCC survey, which polled over 250 businesses with employees still on furlough, revealed that one in five
are planning to make staff redundant following the rise in employer contributions to the Coronavirus Job
Retention Scheme (CJRS).
Jane Gratton, Head of People Policy at the BCC, said:
‘The changes to the furlough scheme will likely result in many thousands of people being released back into
the labour market, as employers who are still struggling to recover from the recession are forced to make
redundancies and cuts to working hours.
‘With widespread skills shortages across the economy, some will find new jobs where their skills are in
demand, while others will need to retrain for opportunities in a different sector.’
Internet links: BCC website
Advisory fuel rates for company cars
New company car advisory fuel rates have been published and took effect from 1 September 2021.
The guidance states: ‘you can use the previous rates for up to one month from the date the new rates
apply’. The rates only apply to employees using a company car.
The advisory fuel rates for journeys undertaken on or after 1 September 2021 are:
|1400cc or less||12p|
|1401cc – 2000cc||14p|
|1400cc or less||7p|
|1401cc – 2000cc||8p|
|1600cc or less||10p|
|1601cc – 2000cc||12p|
HMRC guidance states that the rates only apply when you either:
- reimburse employees for business travel in their company cars
- require employees to repay the cost of fuel used for private travel.
You must not use these rates in any other circumstances.
The Advisory Electricity Rate for fully electric cars is 4p per mile. Electricity is not a fuel for car fuel
If you would like to discuss your company car policy, please contact us.
Internet link: GOV.UK AFR
Employers ‘named and shamed’ for paying less than minimum wage
The government has ‘named and shamed’ 191 companies that have broken National Minimum Wage (NMW) laws.
Following investigations by HMRC, the named firms have been fined for owing £2.1 million to over 34,000
workers. The breaches took place between 2011 and 2018. Named employers have since been made to pay back what
they owed to employees and were fined an additional £3.2 million.
According to HMRC, 47% of firms wrongly deducted pay from workers’ wages, including for uniforms and expenses.
In addition, 30% failed to pay workers for all the time they had worked, such as when they worked overtime,
while 19% paid the incorrect apprenticeship rate.
Business Minister Paul Scully said:
‘Our minimum wage laws are there to ensure a fair day’s work gets a fair day’s pay – it is unacceptable for
any company to come up short.
‘All employers, including those on this list, need to pay workers properly.
‘This government will continue to protect workers’ rights vigilantly, and employers that short-change
workers won’t get off lightly.’
Internet link: GOV.UK