Budget 2010 – Review of HMRC powers
A number of Budget Notices were released following the Chancellors Budget speech concerning the ongoing review of HRMC’s powers.
The Budget Notices refer to the following:
- New penalties for late filing of returns and payment of tax. The late filing and late payment penalty models are broadly similar. They are designed to encourage filing and payment by the correct dates by introducing an escalating series of penalties depending upon the number of failures within a set penalty period. Further penalties will arise if there is a prolonged delay in filing returns or paying the tax due. The implementation of these penalties requires significant changes to HMRC’s computer systems and will be brought into effect over the coming years.
- Tackling offshore tax evasion. New legislation is expected to apply to tax periods commencing on or after 1 April 2011 to provide for larger penalties for taxpayers who fail to provide a full account of their income tax or capital gains tax liabilities, where the failure is linked to an offshore matter.
- Excise modernisation and compliance checks. This measure will update the compliance checking framework for excise duties including modernising information and inspection powers; and aligning the record-keeping rules and the time limits for assessments and claims with changes made to other taxes and duties. The changes are expected to take effect from 1 April 2011.
- Security for payment of PAYE. These measures will affect Employers who operate Pay As You Earn (PAYE) schemes to account for income tax and National Insurance Contributions (NICs) and have a history of serious non-compliance in terms of paying late or not paying. The new measure, if it becomes law, would introduce a new criminal offence where a person required to give a security fails to do so. The changes are expected to take effect from 6 April 2011.