A practical guide on the powers of HMRC

Presentation by: Sue Bradshaw Date: 3 September 2009The Paper Trail

Sue Bradshaw

BTG-Tax

• Former Senior Tax Investigator in HMRC – 25 years

• Headed HMRC Specialist Investigations Civil Fraud Investigators in London

• Board of HMRC National Offshore Project team

• 7 years in private practice assisting individuals and companies with taxation matters

Tel no: +_44 (0) 207 024 8374Mobile: +_44 (0) 7765 095459E-mail: sue.bradshaw@btg-tax.com

Sue Bradshaw

BTG-Tax

• HMRC information powers – new rules

• HMRC penalties – new rules

• Risk assessment etc.

• UK compliance activity in the offshore arena

• New Disclosure Opportunity and Liechtenstein Disclosure Facility

Sue Bradshaw

BTG-Tax

New Powers and Penalties

• Overhaul of HMRC Powers and Penalties

• Brings together Inland Revenue and Customs

• Behaviour based legislation

• Information and Inspection powers

Sue Bradshaw

BTG-Tax

New Powers – From 1 April 2009HMRC have new powers to:

• gather information and examine documents

• Inspect business premises and business assets and business documents on those premises

• check records before filing

But

• Info/docs must reasonably be required to check a person’s tax position

• Still some restrictions for some types of highly confidential information

• Safeguards to ensure HMRC act reasonably

Sue Bradshaw

BTG-Tax

New Penalties- from 1 April 2009

• Return periods on/after 1 April 2008 and due to be filed on/after 1 April 2009

• Submission of incorrect document

• All taxes

• Now applies to Understatements and Inflated losses

• No penalty for mistake

• Fixed band penalties related to behaviour

Sue Bradshaw

BTG-Tax

100%

0%

Deliberate

Max 30%

Min 15% (with PD)

Min 0% (with UPD)

Max 70%

Min 35% (with PD)

Min 20% (with UPD)

Max 100%

Min 50% (with PD)

Min 30% (with UPD)

Failure to take reasonable care

understatement with concealment

Mistake Deliberate understatement

Ranges of Penalties (Sch 24 Para10 FA 2007)

UPD = Unprompted disclosurePD = Prompted disclosure

Sue Bradshaw

BTG-Tax

0

20

40

60

80

Not takingreasonable care

Deliberateunderstatement

Deliberateunderstatement with

concealment

Average Level of Penalty new and old regimes

Old Regime

New Regime

‘Old’ Penalty Regime v New Regime

Paying the penalty – HMRC new approach to compliance

Sue Bradshaw

BTG-Tax

HMRC’s Compliance Activity – New procedures

• Disclosure of Tax Avoidance Schemes

• Litigation and Settlement Strategy

• Risk Assessment for Large Corporates

• Personal Tax Accountability of Senior Accounting Officer

• Publishing the names of deliberate tax defaulters

Sue Bradshaw

BTG-Tax HMRC’s Compliance Activity - Offshore

• ‘Amnesty’- 2007 Offshore Disclosure Facility

• Offshore Bank Data - information notices to 308 banks – very recently

• ‘Amnesty’- New disclosure opportunity – 1 September 2009 to 12 March 2010- Liechtenstein Disclosure Facility – 1 September 2009 to 31 March 2010

• Cross Border Cooperation – G20, various Exchange agreements- Bermuda - Jersey - Anguilla- Isle of Man - Guernsey - Turks and Caicos- Gibraltar - BVI - Liechtenstein

Sue BradshawBTG Tax

SummaryNew powers and penalties • Document retention• Guidance/plan for Inspections• Manage information/inspection notices• Voluntary disclosure will reduce penalties

Risk assessment/SAO certificate• Ensure systems and processes are robust

Overseas accounts/companies/assets • properly managed and disclosed• Use NDO/LDF if appropriate to gain beneficial settlement

Sue BradshawBTG-Tax

Questions.