New penalties, compliance checks and appeals
New compliance check powers
Compliance checks are those HM Revenue & Customs (HMRC) carry out to make sure we are all paying the right amount of tax (in their opinion). There are several types of compliance checks including enquiries, investigations, employer compliance reviews and VAT assurance visits.
The majority of HMRCs new powers for compliance checks fall into three categories;
- Requests for information and documents
- Pre-arranged visits
- Unannounced visits
It is the possibility of unannounced visits under these new powers that have caused alarm, but from reading the small print this will remain a very rare event and is aimed at people involved with serious tax evasion or fraud.
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New penalty regime
The new penalty regime introduces graduated financial penalties based on the behaviour of the taxpayer which caused the error and the amount of tax underdeclared. The penalties range from 0% where reasonable care has been taken to 100% for deliberate and concealed inaccuracies. Although HMRC have denied that the new regime is aimed at increasing the penalty yield it is fully anticipated that it will. To minimise penalties it will be important to disclose any errors you find and cooperate with reasonable requests made by HMRC.
New appeals process
The new appeals process introduces a single Tribunal system for appealing tax decisions that you disagree with and replaces the previous system of General and Special Commissioners. It has introduced a statutory option for taxpayers to have an independent review of their case by an HMRC officer not already involved with the case. These reviews should be a useful tool for ensuring fewer cases are taken to Tribunal, but it is yet to be seen whether this is actually the case.