HMRC has issued HMRC Penalties: a Discussion Document which is open for comment until 11 May.
In chapter 4 they comment that “Stakeholders have raised some concerns about how we apply penalties in practice.” and set out these areas. They then highlight in the next chapter the role of penalties and how they may change. One comment and option is:
5.6. We currently impose a large number of low-value penalties in Income Tax Self Assessment and expect to do the same in the Real Time Information PAYE regime (known as ‘RTI’). We want to consider moving to a different model.
5.7. One option could be a progressive system similar to penalty points for motoring offences, so that initial financial penalties are avoided, but more substantial penalties then apply for more serious failures or for persistent non-compliance with obligations. There may be advantages in not initially applying penalties, but the downside might be that customers fail to realise the importance of non-compliant behaviour. The role of our digital communications would then be key in ensuring there are no surprises for customers.
You can access the discussion document via the related link to the GOV.UK website aside.