By now, you may have already begun trying to make your New Year’s resolutions stick, although some may have already been abandoned.

For HMRC, a consistent resolution is to tackle the tax gap that contributes to the challenges in raising public finance.

It is worth understanding what HMRC is aiming to achieve this year and how it may impact you.

How is HMRC planning to tackle the tax gap?

As the tax gap arises when individuals and businesses fail to pay the correct amount of tax they owe, it is logical that HMRC will tackle this with harsher penalties and stricter compliance measures.

It is believed that 40 per cent of SMEs failed to pay the corporation tax they owed in the 2023/2024 fiscal year.

Only £22 billion of tax was collected compared to the £36.7 billion that was owed.

HMRC no longer want to leave £14 billion sitting on the table and it is not just SMEs that fail to pay the correct amount of tax.

As such, new compliance measures and penalties are set to be introduced to close the gap and raise more tax revenue.

What are the new penalties being introduced in 2026?

Having not changed for 25 years, the penalty for failing to pay Corporation Tax (CT) is set to increase.

From 1 April, missing a CT filing will incur a £200 penalty, double the current penalty of £100.

That figure will double again to £400 after three months if you continue not to complete your tax filing.

Repeat offenders will face the top penalty of £2000, which is incurred when three successive filings are late.

As operational costs rise, it is hoped that the penalties will carry enough of a deterrent that businesses take their tax filings seriously.

Mistakes contribute to the tax gap as much as deliberate avoidance and harsher fines should incentivise greater care to be taken when preparing filings.

This year also sees the introduction of MTD for Income Tax, but the associated penalties for missing deadlines do not come into effect until 2027.

As such, there is still time for sole traders, landlords and self-employed individuals to get to grips with MTD before punitive measures necessitate full accuracy and compliance.

Regardless, it is best to hit the ground running with MTD and try to get the new quarterly filings completed accurately and on time to set a good precedent for the future.

Whether you are looking to sort out the tax filings of a business or an individual, our expert team is on hand to make sure you know how to do so effectively.

We can support you throughout 2026 so that you do not feel the sting of the increased penalties.

If better tax compliance is one of your New Year’s resolutions, speak to our team today.