Autumn Budget 2021: Tax penalties & compliance

The Chancellor made no new announcements in respect of tax penalties, compliance and administration in his Autumn Budget 2021. 

Discovery Assessments

With retrospective effect: 

• Finance Bill 2022 will include amendments to the Discovery provisions to ensure that HMRC can use its powers of discovery to recover certain tax charges, including the High-Income Child Benefit Charge (HICBC), Gift Aid donation-related charges and some pension charges. 

All of the following changes had been pre-announced prior the Budget.

 Making Tax Digital

• Making Tax Digital for Income Tax delayed until April 2024.

Changes to basis periods

From April 2024

• Legislation will be included in Finance Bill 2022 to simplify the basis period rules for the self-employed and partners.
• This will now include a more flexible use of overlap relief in the transition year and provisions to reduce the impact of transition profits on allowances and benefits.
• See Consultation: Income Tax Basis Period reform. 

Tax Penalties

From 1 April 2022

• New late submission and late payment penalties for VAT apply for VAT registered businesses. 

From 6 April 2024

• New Penalties for the late submission and late payment of tax for Income Tax Self Assessment (ITSA) for taxpayers in ITSA who are required to submit digital quarterly updates through MTD.

From 6 April 2025

• The new penalty regime applies for all other ITSA taxpayers.

Anti-Money Laundering

From 1 April 2022:

• As announced in the Budget 2020, the Finance Bill 2022 will establish an Economic Crime (Anti-Money Laundering) Levy payable as a fixed fee by entities subject to the Money Laundering Regulations and based on entity size. Small entities will be fully exempt. 

Promoters of Tax Avoidance

Ongoing: 

• Finance Bill 2022 will include further legislation for clamping down on promoters of tax avoidance schemes.
• See Responses to clampdown on tax avoidance promoters consultation

Uncertain Tax Treatment

From 1 April 2022

• A requirement for large businesses to notify HMRC when they take an uncertain position in relation to a tax matter relating to VAT, Corporation Tax or Income Tax. 
• New Uncertain Tax Treatment guidance is released

Useful guides on this topic

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

Tax Update and rolling tax planner 2021-22
A summary of all the announcements on this topic over the last year.

MTD: Toolkit for accountants
What is the current timetable for Making Tax Digital (MTD)? How will it work? Which clients will be excluded? What planning needs to be undertaken?  

Discovery Assessments
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? What are your rights of appeal and defences?