It’s never been more important to comply with your UK tax obligations. Knowing the tax that you’re liable for, and paying this in a timely fashion, is an essential part of your wealth planning.
In this video Jennifer Knowlson explains why tax compliance has become more important than ever, what to consider if you have outstanding tax issues and how to manage your tax obligations going forward.
The Government is focusing on curbing tax avoidance and HM Revenue & Customs’ (HMRC’s) activities in this area are estimated to deliver almost £22bn per year in additional revenue by 2014/15.
As part of this activity, HMRC is specifically targeting offshore avoidance in territories such as the Channel Islands and is sending letters out to non-compliant individuals. And with HMRC devoting more resource to their High Net Worth Unit (which focuses on the tax affairs of the UK’s high net worth individuals) it’s never been more important to get your tax affairs in order.
Do you employ a nanny, housekeeper, gardener or other domestic employee? Then you're likely to be caught by the real-time information regime for PAYE, which imposes strict deadlines on submitting payroll information to HMRC which are linked to every payment of earnings.
Talk to us or your payroll provider to make sure you're ready as the mandatory requirements come in to effect from 6 April 2013.
UK/Swiss Tax Agreement and the Liechtenstein Disclosure Facility – If you have Swiss bankable assets, you must act by 31 May 2013 or you could face a levy of up to 41% on your assets – we can help with disclosures if you have undeclared offshore income or gains, but you must act soon. See the Liechtenstein Disclosure Facility (LDF) for more detail on how we can help.
Major anti-avoidance legislation is currently being drafted in the form of the general anti-abuse rule (GAAR) which is designed to target aggressive tax planning. It’s due to come in from mid 2013 and will apply to (amongst other taxes) income tax, capital gains tax, inheritance tax, stamp duty land tax and the new annual residential property tax, and there will be no clearance procedure, so we’d recommend you seek advice prior to initiating any future tax planning.
HMRC has also brought in a new, more stringent tax return penalty regime for late filing or late payment – so making sure that your return is completed and payment of tax due is done on time is more important than ever. If you’ve missed the 31 January 2013 filing deadline for 2011/2012 returns you should still aim to file as soon as possible, as the penalties rise depending on the number of days your filing and associate tax payment are late by. Click here for more details.
|The detail: If your 2011/12 return is filed on|
|1 February 2013 or later||You'll receive a £100 penalty regardless of how much tax is due on your return.|
|1 May 2013 or later||You'll be fined an additional £10 per day up to a £900 maximum|
|1 August 2013 or later||You'll receive an additional penalty of £300 or 5% of the tax due on the return (whichever is greater)|
|1 February 2014 or later||You'll be charged an additional penalty of £300 or 5% of the tax due on the return (whichever is greater)|
|The detail: If your tax isn't paid by 31 January, in addition to interest you will be subject to the following penalties:|
|30-day penalty:||if the payment is 30 days late, you'll receive a penalty of 5% of the tax owed at 2 March 2013.|
|6-month penalty:||if the payment is 6 months late, you'll receive a penalty of 5% of the tax owed at 2 August 2013 in addition to the 30-day penalty|
|12-month penalty:||if the payment is 6 months late, you'll receive a penalty of 5% of the tax owed at 31 January 2014 in addition to the 30-day and 6-month penalties|
As part of its ongoing initiative, HMRC has already signed an agreement with the Isle of Man (see http://www.pwc.co.uk/tax/issues/tax-disclosures.jhtml and http://pdf.pwc.co.uk/iomdf-2013.pdf ) and is likely to expand its offshore agreements into other territories such as Singapore. So proactively reviewing your offshore affairs and ensuring tax compliance is highly advisable.
HMRC enquiries can be stressful and you could face penalties of up to 100% of the tax due on an incorrect return. HMRC are devoting more resource to focus on the tax affairs of the UK’s high net worth individuals, so it’s never been more important to deal with an enquiry effectively and efficiently. Our investigations specialists can help you to manage the process.