Tax Administration

Payments, Repayments and Debt

HMRC are introducing Managed Payment Plans (MPP’s) for taxpayers so that they can spread their tax payments equally over a period straddling the normal due dates. Taxpayers will be protected from the normal interest and penalty consequences. HMRC want to be able to collect small debts it is owed through the PAYE system. There will be limits on how much that can be collected in this way. They also want to require companies and other third parties to supply HMRC with contact details for people who are in debt to HMRC and with whom HMRC have lost contact.

Compliance Checks

It is proposed that the 2009 Finance Bill extends the compliance checking framework rules for Insurance Premium Tax (IPT), Stamp Duty Land Tax (SDLT), stamp duty reserve tax (SDRT), Inheritance tax (IHT) and petroleum revenue tax (PRT).

Comment: This whole compliance check regime represents a considerable extension of HMRC powers of access.

Penalties for late filing of returns

New penalties for late tax returns include a £100 fine for missing the due date irrespective of whether the tax has been paid, daily penalties of £10 a day for up to 90 days for returns that are more than 3 months late. There will be a penalty of 5% of the tax are due for returns over 6 months late and another 5% where the return is 12 months late, and up to 70% of the tax due where the return is more than 12 months late and the taxpayer has deliberately withheld information. Finally, there will be an additional penalty of up to 100% of the tax where the concealment is deliberate.

Penalties for late payment of tax

There will be a penalty of 5% of the amount of tax unpaid, generally one month after the payment date. Further surcharges of 5% will be imposed where tax remains unpaid after 6 months and 12 months respectively. There will be a suspension of these penalties where the taxpayer agrees a time to pay.

Late filing of Construction Industry Scheme returns

A fixed penalty of £100 for any late return. Additional fixed penalty of £200 if any return is late by more than 3 months, penalties of 5% of deductions due for prolonged failures over 6 months and again at 12 months. Finally higher penalties of 70% of the tax due if over 12 months late and information has been deliberately withheld.

Late payment of PAYE

The amount of the penalty will depend on the number of defaults in any 12 month period. The first default receives no penalty. A second late payment will attract a penalty of 2% of the tax unpaid rising to 5%. Further penalties of 5% of any amounts unpaid at 6 & 12 months. Late payment charges will not be charged where time to pay has been agreed.

Comment: These are draconian provisions aligned with the current VAT penalty regime to ‘encourage’ compliance.

Accountability of Senior Accounting officers

For large companies and large groups it is proposed that the senior accounting officer will certify annually that the accounting systems are adequate for the purpose of calculating their tax liabilities. There will be penalties on these individuals personally and on the company for a careless or deliberate system failure. HMRC will be able to require the names of these responsible individuals.

Names of Tax defaulters

The names of taxpayers who are penalised for deliberating understating tax due or overstating claims or losses of more than £25,000, or have failed to notify HMRC leading to a loss of tax of more than £25,000 will be published. Taxpayers who make a full unprompted disclosure within the time limits will not have their names published.