Plans to introduce a new two tiered penalty system for individuals and businesses that do not pay their tax bills on time have been included in the draft Finance Bill 2018-19. The government has said that the new late payment penalty regime will help to ensure that those who pay their tax on time are not disadvantaged by those who do not and to incentivise payment on time where possible. There will also be measures put in place to ensure that taxpayers who have a reasonable excuse for not making a payment on time are not disadvantaged. The new regime will initially apply to regular VAT, CT and Income Tax Self Assessment obligations. The penalties will consist of two separate penalty charges. The first charge will be based upon payments and agreements to pay in the first 30 days after the payment due date. If a payment is made within 15 days of the due date no penalty will be payable, a reduced penalty will be payable if payment is made between 16-30 days. After 30 days a full penalty will be charged. A second charge based upon how long the debt remains outstanding will start to be levied after 30 days and will continue until the debt is repaid in full.HMRC will publish further details including the rates of the penalties in due course. A staged implementation of the measure is expected to start with VAT from 1 April 2020.