Weekly Tax Update - Monday 4th April 2011

1. General News

   1.1 New regime for penalties for late filing and late payment of tax

   HMRC has issued a reminder about the new penalty regime for late filed tax returns and late payment of tax as follows:

   "The penalties for filing your tax return late are:

   Day one: you will be charged an initial penalty of £100, even if you have no tax to pay or you have already paid all the tax you owe Three months late: you will be charged an automatic daily penalty of £10 per day, up to a maximum of £900 Six months late: you will be charged further penalties, which are the greater of 5 per cent of tax due or £300 Twelve months late: you will be charged yet more penalties, which are the greatest of 5 per cent of tax due or £300. In serious cases you face a higher penalty of up to 100 per cent of the tax due. Penalties for paying your tax late are:

   Thirty days late: you will be charged an initial penalty of 5 per cent of the tax unpaid at that date Six months late: you will be charged a further penalty of 5 per cent of the tax that is still unpaid Twelve months late: you will be charged a further penalty of 5 per cent of the tax that is still unpaid These penalties are on top of the interest that HMRC will charge on all outstanding amounts, including unpaid penalties, until your payment is received.

   Penalties will be automatically sent to all Self Assessment taxpayers who do not file and pay on time. Taxpayers will be able to appeal against any penalty on the grounds that they have a reasonable excuse for not complying on time. All penalty notices will include an appeal form and details on how to appeal."

   This means that a taxpayer who was one year late in filing his return but who had paid all the tax on time would face penalties as follows:

   Day one: an initial penalty of £100 Three months late: an automatic daily penalty of £10 per day, up to a maximum of £900 Six months late: an additional £300 or 5% of any tax liability which would have been shown on the tax return, whichever is higher Twelve months late: a further £300 or 5% of any tax liability which would have been shown on the tax return, whichever is higher. http://nds.coi.gov.uk/clientmicrosite/Content/Detail.aspx?ClientId=257&NewsAreaId=2&ReleaseID=418900&SubjectId=36

   1.2 Finance Bill 2011

   The Government published the updated Finance Bill and explanatory notes on Thursday 31 March 2011.

   www.hmrc.gov.uk/budget-updates/march2011/finance-bill.pdf

   www.hm-treasury.gov.uk/d/finance_no3_bill_explanatory_notes.pdf

   1.3 Working Together Bulletin 42

   HMRC has issued the latest Working Together bulletin which includes the top five open issues (delays in dealing with correspondences, time taken for HMRC correspondence to reach taxpayers, call backs, debt management issues and coding of underpayments).

   www.hmrc.gov.uk/agents/working-together-42.pdf

   1.4 Tax Consultation Framework

   The Government has issued the responses to its consultation together with an updated framework for future consultations.

   http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ConsultationDocuments&propertyType=document&columns=1&id=HMCE_PROD1_031175

   1.5 Tax Consultation Tracker

   An updated consultation tracker has been published following publication of Finance Bill 2011. The consultation on mandatory pooling of fixtures (listed under the corporation tax heading) is scheduled for 31 May 2011, as is a consultation on clarifying capital allowances for feed-in tariff businesses. June 14 will see the consultation on debt cap rules. In June there will be a consultation on a tax transparent fund vehicle and summer 2011 will see consultation on giving further support to seed investment through EIS. The full list can be found at: www.hm-treasury.gov.uk/d/tax_consultation_tracker_310311.pdf

   1.6 MRC toolkits

   Two further toolkits have been added: CGT for shares and Income Tax Losses. The full list of toolkits can be found at:

   www.hmrc.gov.uk/agents/prereturn-support-agents.htm

   1.7 HMRC Brief 17/11 - guidance on Special Relief

   From 1 April 2011...