New tax penalties begin to bite from 1 April
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Issued 31 March 2010 11:42
Changes to align powers, deterrents and safeguards in the tax system will
be introduced by HM Revenue & Customs (HMRC) from 1 April.
The changes cover the following three key areas:
Failure to notify penalty
People and companies that fail to register for tax or declare taxable income
will face a failure to notify penalty.
HMRC has always charged penalties if people donít register for tax or declare
their tax liabilities. But from 1 April, there will be a single consistent
penalty system across most taxes.
An inaccuracy penalty, introduced last April across the main HMRC taxes for
inaccurate tax documents and returns, is being extended to almost all other
Most people take care to declare and pay the right amount of tax on time. But
where there is insufficient care, a penalty is charged, which is a percentage of
the additional tax that is due. The maximum rate can be 100 per cent where
someone has deliberately evaded their tax and tried to conceal it.
Under this penalty, however, if reasonable care is taken to get the tax
right, customers will not be penalised if they make a mistake. Ways that
customers can show they have taken reasonable care include keeping accurate
records to make sure tax returns are correct, and checking what the correct
position is when something is not understood.
Compliance checks legislation, which came in last April, set out a consistent
system across the main taxes for how HMRC checks that a companyís or an
individualís tax is correct. This is being extended to include: Aggregate
Levies; Climate Change Levies; Inheritance Tax; Insurance Premium Tax; Landfill
Tax; Petroleum Revenue Tax; Stamp Duty Land Tax; and Stamp Duty Reserve Tax.
Dave Hartnett, HMRC Permanent Secretary for Tax, said:
ďThese changes underpin our drive to improve tax compliance in the UK. They
are carefully constructed to support and encourage those who make a genuine
effort to get their tax right, while coming down hard on those who donít.Ē
1. The failure to notify legislation falls under Schedule 41of the 2008
Finance Act. For more details of the penalty: www.hmrc.gov.uk/about/new-penalties/failure-to-notify.pdf
2. The inaccuracy penalty legislation falls under Schedule 24 of the 2007
Finance Act. It is being extended to other taxes under Schedule 40 of the 2008
Finance Act. For details: www.hmrc.gov.uk/about/new-penalties/penalties-leaflet.pdf
3. The compliance checks legislation falls under Schedules 36, 37 and 39 of
the 2008 Finance Act. It is being extended to other taxes under Schedules 48, 50
and 51 of the 2009 Finance Act. For more details of compliance checks:
4. More general information about new penalties: www.hmrc.gov.uk/about/new-penalties/index.htm.
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updated regularly and may be out of date at time of reading.
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Article Published/Sorted/Amended on Scopulus 2010-04-02 09:48:09 in Tax Articles