Draft Finance Act 2021 (Increase in Schedule 26 Penalty Percentages) Regulations 2025

Gareth Davies Excerpts

Wednesday 7th May 2025 General Committees

[Gareth Davies (Grantham and Bourne) (Con)]

It is a great pleasure to be here, Mrs Harris. This is a relatively straightforward instrument, and I am grateful to the Minister for setting out its detail.

Tackling the tax gap is critical, and I am pleased that, between 2010 and 2024—just to pick two years at random —the tax gap reduced from 6.2% to 4.8%. It is vital that we go further and do everything that we can to reduce that tax gap. The Finance Act 2021 introduced a new penalty regime for late submissions of returns and for late payment of tax. By revising minor parts of that Act, these regulations impose harsher penalties on the amount of tax outstanding for those paying VAT and those paying under Making Tax Digital for income tax self-assessment.

As I said, we will not oppose the measure, but I have a couple of questions for the Minister. First, what efforts is he making to improve HMRC customer services to help support taxpayers who are just seeking to do the right thing? Secondly, what communications will accompany the changes to further encourage compliance and bring down the tax gap even further, which is what we all want?