Penalties, interest and time limits

FORTHCOMING CHANGES relating to (1) Making Tax Digital (MTD) for Income Tax and penalty reform: late payment and late submission penalties, (2) increases to corporation tax late filing penalties, and (3) penalty reform calls for evidence and behavioural penalties reform: (1) As announced at Spring Budget 2021, Finance Act 2021 provides for substantial changes to the regimes for late payment and late submission penalties for VAT and income tax. For VAT, these changes (alongside changes aligning the late payment interest rules for VAT with those for income tax) took effect from 1 January 2023 (see Practice Note: VAT penalties). For those within income tax self-assessment (ITSA):

•
prior to Budget 2025, the changes were expected to come into effect as taxpayers become mandated to Making Tax Digital (MTD): from 6 April 2026 for those with business or property turnover of over £50,000 per year; from 6 April 2027 for those with business or property turnover of over £30,000 per year; and (as announced at Spring Statement 2025) from 6 April 2028 for sole traders and landlords with qualifying income over £20,000 per year

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Tax News

FTT rules on the VAT consequences of services received from abroad (Genuine Care Homecare Services Ltd v HMRC)

Tax analysis: In Genuine Care Homecare Services Ltd v HMRC, the First-tier Tax Tribunal (FTT) dismissed the appellant’s appeal against assessments for VAT and a failure to notify penalty. It found that the assessments were made in time and that the appellant had no reasonable excuse for failing to notify HMRC of its liability to register for VAT in time.

UT rules VAT due in full on payments for telecom plan bundles (Lycamobile UK Ltd v HMRC)

Tax analysis: In Lycamobile UK Ltd v HMRC, the Upper Tribunal (UT) upheld the decision of the First-tier Tax Tribunal (FTT) and found that VAT should have been accounted for on the full amount payable for mobile phone plan bundles at the time the supplier received the consideration, rather than when they were used, as the supply was the right to use the plan bundles.

Tax weekly highlights—19 February 2026

This week's edition of Tax weekly highlights includes: (1) analysis of the Upper Tribunal’s (UT) decision in MWL International Ltd and another v HMRC concerning arguments that a 1993 agreement between the taxpayer and the Inland Revenue (as it then was) gave rise to an estoppel by convention or a legitimate expectation preventing HMRC from making National Insurance contributions (NICs) determinations many years later; (2) new HMRC guidance on the forthcoming tax adviser registration requirements; (3) HMRC’s performance update for October to December 2025; (4) publication of the synthesised texts of three tax treaties; and (5) a roundup of recent judicial decisions and HMRC manual updates.

UT decides that neither estoppel by convention nor legitimate expectation prevented NICs charge (MWL International Ltd and another v HMRC)

Tax analysis: In MWL International Ltd and another v HMRC, the Upper Tribunal (UT) dismissed the companies’ appeals against HMRC’s decision that Class 1A National Insurance contributions (NICs) were due in respect of cars leased by the companies and used by employees. The UT found that HMRC was not prevented by estoppel by convention from departing from a 1993 agreement that the cars were pooled cars, and that the companies could not rely on a legitimate expectation that the cars would be treated as pooled cars.