Obligation to send HMRC leaflet, Disclosure opportunities, Changes to CT notices

Some taxpayers feel that all tax agents are on the side of HMRC. New regulations which require you to send a specific HMRC leaflet to some of your clients will reinforce this belief. We also outline new tax disclosure opportunities and proposed penalties which support HMRC's campaign against tax avoidance. Finally, you need to be aware of changes to the distribution of some CT notices.

This is an extract from our topical tax tips newsletter dated 15 September 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

Disclosure opportunities 

HMRC is convinced there is a large population who fail to declare all of their taxable income. So it has set up a permanent digital disclosure service (DDS) to allow individuals, companies and trustees to come clean about their tax affairs. 

UK matters 

The DDS allows the taxpayer, or you as their tax agent, to make a declaration under any of the current open disclosure campaigns for: 

• Let property 
• Second incomes 
• Credit card sales; and 
• Worldwide interests (see below) 

However, to use the DDS the person has to set-up a Government Gateway account. As an agent you should already have Government Gateway login and password, so that should not be a problem. 

The DDS can't be used to correct errors on tax returns already submitted for SA, VAT, IHT or payroll. It should not be used to report any incidence of tax fraud committed by the taxpayer or by another person. 

Worldwide 

The worldwide disclosure facility opened on 5 September 2016 to replace the various offshore disclosure facilities (including LDF) which closed last year. However, there are no special penalty reductions available with the worldwide disclosure facility, only a threat of more penalties if a full disclosure is not made by 30 September 2018. 

After that date new legislation will come into effect which will impose a requirement on taxpayers to declare any UK tax liabilities relating to offshore interests. If the taxpayer fails to correct their UK tax declaration in respect of offshore interests, sanctions will be imposed. HMRC is consulting on the design and implementation of those sanctions. 

HMRC is banking on the fact that from 2018 it will have access to vast amounts of taxinformation reported under the common reporting standard (CRS), from over 100 countries around the world. This CRS data will allow HMRC to identify UK taxpayers who have not fully declared their overseas interests. In addition, there is a separate initiative between; UK, Germany, France, Italy and Spain to share data from registers of beneficial ownership of companies and properties. 

Finally, you should be aware of a separate discussion document on strengthening taxavoidance sanctions and deterrents, which is explicitly aimed at tax advisers, accountants, financial advisers and anyone who helps to set up companies or other vehicles which are used in the implementation of tax avoidance. The penalties imposed upon the adviser in such cases could well exceed that paid by the taxpayer.

This is an extract from our topical tax tips newsletter dated 15 September 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

The full newsletter contained the remainder of this item plus links to related source material and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>