New penalty regime
A entirely new penalty regime takes effect for all tax filings due on or after 1 April 2009 across the following taxes; Income Tax, VAT, employers PAYE, National Insurance contributions, Corporation Tax, Capital Gains Tax and the ConstructionIndustry Scheme.
The new system has been introduced to make penalties simpler to understand and more consistent across the taxes. It is also intended to be fairer to businesses that are tax compliant and to levy greater penalties on businesses and tax payers who do not take reasonable care.
The main principles of the new rules are as follows:
– To support businesses which seek to comply and to penalise those who take advantage through non-compliance;
– To be simple to understand and administer as well as being efficient and effective;
– To act as a deterrent but also to offer encouragement to taxpayers who feel they may not have paid the right amount of tax;
– To recognise the seriousness of non-compliance;
– To povide a fair balance between the powers needed for HMRC and safeguards for customers considering the risks involved.
The penalties can range from 0% where reasonable care is shown to have been taken but nonetheless an incorrect return is submitted up to 100% of the tax where an error is deliberate and the taxpayer attempts to conceal it.
Taxpayers will still have the right to appeal to a Tribunal or request an independent internal review by HMRC.