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Penalties and interest: key measures included in Budget 2021.

Late submission penalties 

A points-based late filing penalty regime will replace existing late filing penalties for VAT and Income Tax. 

This measure was consulted on in 2018, see Penalties: Making Tax Digital. 

Late payment penalties

An amended Late payment penalty regime will be aligned across the main taxes. 

Implementation 

The new late payment and late submission penalty rules will apply as follows:

Interest harmonisation 

New legislation will align the interest rules for VAT with those for Income Tax from April 2022. 

Useful guides on this topic

Budget 2021: Subscriber guide
A detailed guide with links to more detail on all the key topics for SMEs and their owners.

Penalties: Late Filing
Late returns can be subject to a mix of fixed and tax geared penalties. What penalties apply for late filing? Which penalty will apply and when? 

Penalties: Late Payment (Subscriber guide)
What penalties are charged when tax is paid late? A guide for Subscribers.

Grounds for Appeal: Reasonable excuse
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?

Budget 2021: At a glance
A summary key budget announcements together with items published without announcement.


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