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Penalties
Notably, in an effort to bring in the right tax at the right time, and to minimise the need for HMRC to intervene, the Chancellor focused on penalties. Where VAT and Self Assessment taxpayers submitting digital returns pay their tax late, the penalties are increasing. Significantly, if you delay paying by more than 30 days, HMRC will now charge you 10% of the tax unpaid, a huge increase from the current level of 4%.
The Statement also highlights taxpayers’ responsibilities to tell HMRC that they have tax to pay, and get their self assessments right first time. Minimising the need for HMRC to get involved reduces costs at a time when budgets are tight. So the Government have announced they will be seeking views on potentially tightening up penalties for inaccuracies in tax returns, and for failure to tell HMRC that they have tax to pay. Again, we can expect increases.
Tax avoidance
It will surprise no-one that there continues to be a crack-down on tax avoidance, and yet again the Government announced some new measures. This time there was a focus on tax advisors and other professionals who design and promote avoidance schemes, including increasing powers to obtain information from them, and introducing new opportunities to issue “Stop” notices.
The requirement to report the use of an avoidance scheme has been expanded, and penalties for not doing so have been increased.
Advance tax clearance
Alongside the Spring Statement, the Treasury published a consultation seeking views on proposals to shake up the system which allows companies to check the tax treatment of a transaction before they commit to it. The consultation focuses only on major investment projects, however such measures have a tendency to filter down to lower value transactions if they prove successful. Specifically, the Treasury are testing the water on whether HMRC could charge for tax clearances. This brings into reality the prospect of a scenario in which a taxpayer weighs up the financial risk of paying for tax certainty against the possible penalty for getting it wrong. Watch this space.
For more information about how the latest spring statement from the Chancellor will impact your tax position, please get in touch with one of our tax solicitors today.