TaxSource Total

Here you can access summary of the key current tax developments in Ireland, the UK and internationally as reported by Chartered Accountants Ireland

The report of key tax developments are displayed per year, per month, by Ireland, the UK or International and by report title

Penalty Changes from April 2011

HMRC have made a number of changes effective from April 2011 which affect various penalty provisions.

Self-Assessment penalties

Of immediate interest to Chartered Accountants involved in the compliance process are the changes in connection with Self-Assessment deadlines. The new rules started on 6 April 2011 and apply to notices and returns for 2010–11 and later tax years.

The new penalties are cumulative and work by charging more of a penalty the longer a return is late. For example if a tax return is filed six months late, the first three penalties shown in the table below will apply. All of the penalties shown in the table below will be charged even if there is no tax to pay or all tax owed has already been paid. The deadlines and penalties also apply to each partner in a partnership.

Length of delay

Penalty

One day

Initial £100

Three months

£10 each day – up to maximum of £900.

Six months

£300 or 5% of the tax due, whichever is the higher.

Twelve months

£300 or 5% of the tax due, whichever is the higher. In serious cases a penalty of up to 100% of the tax due may arise instead.

Offshore penalties

From 6 April 2011, changes have also been made to the offshore penalty regime for income tax and CGT. Thus the first Self-Assessment returns affected will be for the 2011–12 tax year.

Under the new regime, the maximum penalty for offshore tax evasion will be 200% of the tax due – twice the previous rate. Penalties will also be linked to how readily a foreign territory shares information with the UK.

There are three penalty levels:-

  1. territories in category 1: the penalty rate is the same as existing penalties, up to 100% of the tax due;
  2. territories in category 2: the penalty is 1.5 times existing penalties, up to 150% of tax due;
  3. territories in category 3: the penalty is double existing penalties, up to 200% of tax due.

HMRC has published a list of countries in categories 1 and 3. All other territories are in category 2.

VAT Penalties

From April 2011 if a VAT return should have been submitted online and was sent it in by paper, a penalty will be now be charged. These penalties will apply to returns for accounting periods ending on or after 31 March 2011.

Further information is available on the HMRC website www.hmrc.gov.uk.