In 2007, HM Revenue & Customs encouraged people with undeclared income or gains in foreign bank accounts to put their affairs in order by owning up, with the promise of a maximum 10% penalty for failing to pay the proper tax in earlier years. A further opportunity for those who have not yet come forward will run from autumn 2009 until 31 March 2010. The level of penalty has not yet been announced, but it will presumably be higher than 10%. This is described as a "final opportunity", which implies that HM Revenue & Customs will then seek to identify and penalise more heavily those who have not taken the two chances offered.
Naming and shaming
There are plans to enable HM Revenue & Customs to publish the names of both corporate and individual taxpayers who incur a penalty because they deliberately understated their tax liabilities by over £25,000. In addition, it is proposed that taxpayers who incur a similar penalty on £5,000 or more will be subjected to new reporting requirements: they will have to submit more detailed returns for up to 5 years to show that they have proper systems in place to be able to make a correct tax return and enable HM Revenue & Customs to monitor their compliance with their obligations.
HMRC are cracking down hard: make sure your affairs are in order.
For accounting periods commencing after the Finance Bill receives Royal Assent, large companies will be required to appoint a "senior accounting officer" who will be required to certify to HM Revenue & Customs that the accounting systems in operation are adequate for the preparation of accurate tax returns, or explain any inadequacies in the system and confirm that they have been notified to the company's ors.
Proposals were announced for taxpayers to agree Managed Payment Plans, spreading their tax payments over a period straddling the normal due date, and also for HM Revenue & Customs to collect small outstanding liabilities through the PAYE system. These measures will not come into effect before 2011 or 2012.
Late filing and payment
The penalties for late filing of nearly all sorts of tax returns, including income tax, corporation tax and PAYE but excluding VAT, will be reformed starting in April 2010 with in-year penalties for late PAYE returns. The new rules will cancel the long-standing remission of the £100 late filing penalty under self assessment if there is no tax outstanding.
At the same time, the rules under which interest is charged on late payment of tax will be reformed and made consistent. Monthly PAYE liabilities will be subject to interest on late payment for the first time from April 2010.
In-year penalties and interest on PAYE is a big change.
As widely reported in advance, there will be an incentive of £2,000 payable to anyone who trades in a vehicle which is at least 10 years old against the purchase of a new vehicle. Half of this will be paid by the Government, but the other half will be provided by the car companies. The scheme will run from a date to be announced until 31 March 2010 or until the agreed funding runs out.
HM Revenue & Customs Charter
HM Revenue & Customs will introduce a new statutory Charter by 31 December 2009. The precise contents are still subject to consultation, but it will set out standards of behaviour and values to which the Department will aspire in dealing with taxpayers and others. In the context of the new, enhanced powers of inspection of taxpayers' affairs - announced last year and taking effect on 1 April 2009 - these safeguards for taxpayers could be very important, as long as the Charter is a substantial document.
Closure of schemes
The Budget included, as usual, measures to close a number of specific tax avoidance schemes. Artificial schemes may work in some cases, but they are likely to have a short shelf-life and may in any case be attacked by HM Revenue & Customs through the courts.