HMRC information powers and penalties
The Budget announced a number of minor changes in regard to information powers and penalties that are to be introduced in Finance Bill 2013. These are:
- Inflationary increases of fixed penalties - In addition to repealing a number of minor defunct penalties, the Government intends to introduce legislation to enable fixed penalties to be increased in line with inflation.
- Real Time Information, late payment and late filing penalties - Following a consultation period before the summer, HMRC propose to introduce late payment and late filing penalties under the PAYE 'Real Time Information' process.
- Withdrawal of notice to file a self assessment return - In the context of penalties, HMRC propose to consult before introducing legislation that will enable HMRC, in appropriate circumstances, to withdraw a notice to file a self assessment return. Under the current system, where such a notice is served the self assessment computer system will automatically impose a penalty when returns are not filed by the filing date and this can result in a considerable number of appeals where taxpayers consider that the completion of a return is unwarranted. It is presumed that the intention of the legislation is to afford HMRC with a mechanism to prevent or override such issues.
- FATCA - The Government has agreed to work with the governments of France, Germany, Italy and Spain to facilitate exchange of information between financial institutions and the US IRS for the purposes of the US Foreign Account Tax Compliance Act (FATCA). Following consultation with financial institutions, the necessary legislation will be included in Finance Bill 2013.
- HMRC criminal investigations - In order to bring these powers in line with those for indirect tax and duties, legislation will be introduced to enable HMRC officers conducting criminal investigations into direct tax or tax credits to seize suspected criminal cash, and to exercise Proceeds of Crime Act 'search and seizure' warrants.
Who will be affected?
The proposed changes are part of HMRC's ongoing review of their powers and penalties and will, in some form or another, impact upon all individuals, companies, employers and so on as HMRC move increasingly towards a 'behavioural' regime where compliance is encouraged and non-compliance penalised.
It is envisaged that the proposals will be included in Finance Bill 2013.
Compared with the major changes to penalties and information powers introduced in Finance Acts 2007 and 2008, these are minor changes which form part of HMRC's on-going review and rationalisation of their information powers and the associated penalties for non-compliance. The proposed change that would allow HMRC to withdraw a notice to file a self assessment return will present a simple solution to a long-standing problem and is to be welcomed.