The Penalties for Failure to Pay Tax (Schedule 26 to the Finance Act 2021) (Assessments) Regulations 2024
Introduction
The Penalties for Failure to Pay Tax (Schedule 26 to the Finance Act 2021) (Assessments) Regulations 2024 (the “Regulations”) came into force on 13 November 2024. The Regulations implement Schedule 26 to the Finance Act 2021.
Purpose of the Regulations
The purpose of the Regulations is to provide for the assessment of penalties for failure to pay tax. The Regulations supplement the Taxes Management Act 1970 (the “TMA”) and the Social Security Contributions and Benefits Act 1992 (the “SSCBA”).
Key Provisions
Definition of “failure to pay tax”
The Regulations define “failure to pay tax” as meaning:
- A failure to pay an amount of tax on time; or
- A failure to make a return of income or gains.
Penalties for failure to pay tax
The Regulations set out the penalties that may be imposed for failure to pay tax. The penalties are calculated as a percentage of the unpaid tax. The percentage depends on the length of time that the tax has been unpaid.
Assessments for penalties
The Regulations provide that HMRC may assess a penalty for failure to pay tax. An assessment is a notice that HMRC sends to a taxpayer informing them of the amount of penalty that they owe.
Appeals against assessments
A taxpayer may appeal against an assessment for a penalty. The appeal must be made to the First-tier Tribunal (Tax).
Impact of the Regulations
The Regulations will have a significant impact on taxpayers who fail to pay their taxes on time. The penalties for failure to pay tax are now more severe than they were before the Regulations came into force.
Conclusion
The Regulations are an important piece of legislation that will help HMRC to collect taxes more effectively. The Regulations will also deter taxpayers from failing to pay their taxes on time.
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