Professional Tax Consultancy

New powers for HMRC

On 1 April HMRC implemented 6 pieces of legislation which enabled them to introduce their standard compliance systems. By applying these new powers across a range of taxes from 1 April 2010 they aim to make the tax system more consistent and easier for taxpayers and you to understand. The changes include:

• A failure to notify penalty for people who fail to register for a tax, declare taxable income or notify a new activity on which tax is due
• A new VAT and Excise wrongdoing penalty to deal with abuse of these systems
• A new four year time limit for claims and assessments for Capital Gains Tax, Corporation Tax, Income Tax, PAYE and VAT
• The Compliance Checks legislation and inaccuracy penalties have been extended to more taxes - see list of taxes [http://www.hmrc.gov.uk/about/new-penalties/faqs.htm#10]
• HMRC have published a series of 13 factsheets dealing with the new framework for compliance checks. Links to all the factsheets can be found at: www.hmrc.gov.uk/compliance/factsheets.htm
• HMRC will be able to publish the names of deliberate defaulters who evade more than£25,000 of tax if they do not fully disclose details and the extent of the evasion as soon as possible after the compliance check starts.

On the grounds that it is always useful to know what their interpretation is then the factsheets are well worth a scan. This will provide you with an outline of the powers and penalties.

In addition, from 6 April 2010 there are new penalties for employers and contractors who do not pay PAYE, National Insurance contributions, Construction Industry Scheme deductions and student loan deductions on time and in full. HMRC have provided guidance about the new penalties that may be charged on late payments for periods starting on or after 6 April 2010 of PAYE, student loan deductions, Construction Industry Scheme payments, Class 1 NICs, annual payments of employers' Class 1A NICs and annual PAYE Settlement Agreements payments. The guidance is available on the HMRC website at www.hmrc.gov.uk/paye/problems-inspections/late-payments.htm.

HMRC have been busy as they have also introduced the final planned upgrade to the National Insurance and PAYE Service (NPS). This took place on 6 April and will be rolled out gradually over the next few weeks. The April changes will introduce additional automation to the process of checking the amount of tax paid by an individual for a year.

Apparently, for most customers, NPS will automatically check the amount of tax paid on the individual's total income for the year against the allowances and deductions on their record. Where either too much or too little tax has been paid, a calculation will be issued automatically. This is designed speed up the process of reconciling records at the end of each tax year and reduces clerical involvement. Bearing in mind the usual computerisation problems we have to endure it will be interesting to see if this one actually works.

If you would like some advice on any of these changes do not hesitate to contact us. We would be pleased to help.