Draft legislation: The Penalties for Failure to Pay Tax (Assessments) Regulations 2024 - joint LITRG and CIOT response

In our submission, we suggest certain amendments with a view to ensuring the regulations have the intended effect, as follows:

1. Although the draft regulations mean that an assessment of the second late payment penalty can be made before the expiry of the statutory two year time limit, they do not change how the penalty itself is actually calculated (ie it is by reference to the whole penalty period) and so further amendments are required to enable the amount of the assessment to be determined.
2. If a penalty is charged under these regulations when the tax has been outstanding for two years, there is currently no provision to subsequently assess a further penalty for the remaining period once the tax is eventually paid in full. Assuming the intention is for an assessment to be made for the later period, then further amendments are required.
3. An amendment is required to clarify the position where a taxpayer breaks a Time-to-Pay arrangement at a point when HMRC is too late to assess the second late payment penalty which would otherwise arise, as these draft regulations do not cover this situation.