TaxCorporate TaxBudget 09: Government to increase tax avoidance fine

Budget 09: Government to increase tax avoidance fine

Chancellor to increase penalties for failure to disclose tax avoidance schemes

Alistair Darling, has announced plans to strengthen rules requiring the
disclosure of tax avoidance schemes to HM Revenue & Customs.

In his Budget speech earlier today the chancellor said the government would
‘revise the penalty regime to introduce tougher sanctions for the non
compliant’, and begin discussions about how the taxman can spot tax avoidance
schemes at an earlier stage.

Under current disclosure rules, which were introduced in 2004, the fine for
non disclosure is £5,000.

The ‘Disclosure of Tax Avoidance Schemes’ rules include income tax and VAT to
stamp duty land tax and capital gains.

‘HMRC will begin discussions with interested parties with a view to extending
the ‘hallmarks’ used to identify avoidance schemes, to ensure they continue to
bear down on avoidance, and revising the penalty regime to introduce tougher
sanctions for the non compliant,’ HMRC said in a statement.

‘Hallmarks’ include keeping the tax scheme arrangements confidential from a
competitor and HMRC, and when the promoter of the tax scheme takes a commission
based on the amount of tax they save their customer.

‘This is fine tuning current rules,’ said Nick Parker, regional director of
tax at Tenon, the top 10 accounting firm. ‘The current rules have been very
successful because they are essentially an early warning system to the Inland
Revenue.’

Taxpayers or companies using avoidance schemes are given a reference number
which has to be disclosed on their tax returns. This helps HMRC monitor how
widely certain types of scheme are being used.

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