A discussion document entitled HMRC Penalties has been issued which promotes the view that, in future, the automatic £100 penalty for failure to file a personal tax return by the due date is likely to be abolished.

However, before cheering and celebrating the fact that the date of 31 January will no longer hold any terrors, be careful what you wish for! Whilst nearly 2.5 million individuals failed to file their Self Assessment return by the due date, generating “a nice little earner for HMRC”, nevertheless, the Government has realised that small scale penalties, such as the £100 penalty, are costly to collect. So now HMRC are exploring possible new ways of “encouraging” compliance.

One proposal is for a “points” system based on the number of transgressions and the magnitude of the tax at stake, which will then result in points being incurred – not so much “points mean prizes” as “points means penalties”! And more severe penalties than currently imposed!

However, HMRC has not addressed for how long the points would remain valid nor any of the finer detail. In order to address the problem of habitual late filers, HMRC will be looking for patterns of failure in complying with deadlines and the new approach would apply across the board to all taxes – so, for example, the filing of VAT returns as well as personal tax returns would be brought together under one umbrella “personal account” which could be more easily monitored for non-compliance.

As with other recent HMRC initiatives, there is concern being expressed for those taxpayers who are not computer-savvy nor have access to computers eg some seniors or low-paid groups. Such ideas as “personal accounts” must be considered in the context of such taxpayers.

This is a consultation document and views are requested from any interested parties by 11 May 2015; the professional tax and accounting bodies will be responding to this Consultation and we will report on the results of the consultative process.