HMRC are presently pursuing a number of campaigns designed to target taxpayers who have been less than forthcoming in declaring their taxable income and gains.
This update summarises these campaigns.
Liechtenstein Disclosure Facility (LDF): A new penalty regime was introduced by Schedule 10 of the 2010 Finance Act allowing for a higher penalty for taxpayers who fail to provide a full account of their income tax or capital gains tax liabilities, where the failure is linked to an offshore matter. The penalties came into force for tax periods commencing on or after 1 April 2011. The new penalty regime is linked to the tax transparency of the territory in which the income or gain arises and penalties can be as high as 200% of the tax due.
The only remaining HMRC offer to encourage disclosure is the Liechtenstein Disclosure Facility (LDF) that allows penalties on unpaid tax to be capped at 10% of tax evaded over the last ten years. The LDF commenced on 1 September 2009 and will run until 31 March 2015.
Restaurant sector: The targeting of restaurants is not an amnesty and unlike some other initiatives which seek to tempt taxpayers to come forward under favourable terms there is no formal disclosure facility on offer. HMRC inspectors will therefore have the full range of civil and criminal sanctions at their disposal. This includes the likelihood of restaurants having to repay any unpaid tax, interest and penalties. The worst offenders could face criminal investigation and prison. Any restaurant business that has deliberately evaded tax should take urgent action to make a pre-emptive voluntary disclosure to HMRC.
Other forthcoming campaigns: New campaigns which are expected to begin later this year and next year will target the following areas:
- Individuals that provide private tuition and coaching without declaring their income.
- Individuals and businesses that buy and sell goods online as a trade and who fail to pay the tax due.
- Other business sectors where there is evidence of tax evasion. These campaigns will be based on HMRC’s campaign to target plumbers and will give an opportunity to other groups of tradespeople to come forward and declare unpaid tax.
Any individual or business that has deliberately evaded tax should take immediate action to make a pre-emptive voluntary disclosure to HMRC.
If you would like to discuss any concerns you have please give me a call.