Tax avoidance schemes – daily penalties
HRMC have published draft regulations together with a draft explanatory memorandum which seeks to increase the maximum penalties for failure to comply with certain requirements of the Disclosure of Tax Avoidance Schemes (DOTAS) regime.
The relevant obligations are imposed on promotersand those who are deemed to be promoters of disclosable tax schemes. The increase in daily penalties is intended to change the economics of tax avoidance such that there is a greater incentive to fully comply with the disclosure regime on a timely basis. This will then enable HMRC to introduce amending legislation faster than might previously have been the case.
Once enacted in autumn 2010 the regulations will increase the maximum amount of two daily penalties from £600 to £5,000 per day where there has been an order by HMRC pursuant to an application to the Tribunal or where HMRC has applied for an order to disclose information.