Weekly Tax Update - Monday 15 July 2013

1 GENERAL NEWS

1.1 HMRC launches four new taskforces

HMRC have launched four new taskforces to tackle tax evasion. Taskforces are specialist teams that undertake intensive bursts of activity in specific high-risk trade sectors and locations in the UK. The teams visit traders to examine their records and carry out other investigations.

The taskforces launched on 10 July are into the following areas:

the holiday industry in Blackpool, the Lake District, North Wales, Devon and Cornwall; restaurants in Yorkshire and Humber; road hauliers in the Midlands; the fishing industry in Scotland. Since 2011/12, HMRC's taskforces have collected more than £80 million, and expects to collect £90 million per year from taskforces launched over the next three years.

1.2 Penalties for inaccurate information provided to HMRC

Schedule 24 to FA07 provides for financial penalties when inaccurate information is provided to HMRC. When such information relates to sources or assets in an overseas jurisdiction the scale of penalty is determined by reference to the category of the territory to which the inaccuracy is connected. The Penalties, Offshore Income etc. (Designation of Territories) Order 2011 designates certain territories as category 1 territories or as category 3 territories for the purposes of Schedule 24 to FA07. Any territory not listed in category 1 or category 3 falls by default into category 2.

SI 2013/1618 reclassifies certain territories from category 2 to category 1 (Liechtenstein and Switzerland) and from category 3 to category 2 (Antigua and Barbuda, Armenia, Bahrain, Barbados, Belize, Dominica, Grenada, Mauritius, San Marino, Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines). The order comes into force on 24 July 2013.

www.legislation.gov.uk/uksi/2013/1618/pdfs/uksi_20131618_en.pdf

HMRC guidance on the implications of dishonest conduct by tax agents

HMRC has updated its guidance on the implications of dishonest conduct by tax agents.

www.hmrc.gov.uk/agents/strategy/dishonestconduct.htm

1.3 Revised timeline for the implementation of FATCA

IRS Notice 2013-43 revises the timelines included in the regulations for withholding agents and foreign financial institutions to begin their due diligence, withholding, and reporting requirements under FATCA.

Specifically, this Notice provides a six-month extension for when withholding will begin (ie payments after 30 June 2014) and for implementing new account opening procedures as well as related requirements to comply with FATCA.

The timeline for foreign financial institutions to register as (among other things) participating foreign financial institutions is also extended under the Notice, with the registration portal expected to open on 19 August 2013.

Finally, the Notice provides that financial institutions operating in jurisdictions that have signed an intergovernmental agreement (IGA) covering their financial institutions' compliance with FATCA will be treated as having an effective IGA.

www.irs.gov/pub/irs-drop/n-13-43.pdf

2 PRIVATE CLIENT

2.1 HMRC consults on improving debt collection through PAYE tax codes

The Government has previously consulted twice on the principle of HMRC using the PAYE system to collect more debts due to HMRC ("coding out") as well as increasing the threshold for such collection to £3,000. As part of its efforts to improve the collection of debt HM Revenue & Customs (HMRC) is seeking views on proposed changes to the coding out of debts and...