MSB Accounting Limited

The HMRC is currently pursuing a number of campaigns to target taxpayers who have not adequately declared their taxable income and gains. The three core areas affected are:

Offshore assets and the Liechtenstein Disclosure Facility (LDF)

A higher penalty can now be charged to taxpayers who fail to provide a full account of their income tax or capital gains tax liabilities, where the failure is linked to an offshore matter. The penalties came into force for tax periods commencing on or after 1 April 2011. The new penalty regime is linked to the tax transparency of the territory in which the income or gain arises and penalties can be as high as 200% of the tax due.
The Liechtenstein Disclosure Facility (LDF) LDF offers the most generous terms for making a tax disclosure. Provided a Liechtenstein connection is established, the LDF can be used as an umbrella for the disclosure of any tax liability connected with an overseas asset. It allows penalties on unpaid tax to be capped at 10% of tax evaded over the past ten years. The LDF commenced on 1 September 2009 and will run until 31 March 2015. It is not necessary for all overseas assets to be transferred to Liechtenstein to qualify.

The restaurant sector

Unlike some other initiatives, which seek to tempt taxpayers to come forward under favourable terms, there are no formal disclosure facilities available for the restaurant sector. HMRC inspectors will, therefore, have the full range of civil and criminal sanctions at their disposal. This includes asking restaurants to repay any unpaid tax, interest and penalties. The worst offenders could face criminal investigation and prison.

VAT registration

The VAT Initiative campaign offers businesses the opportunity to inform HMRC that they should have been registered for VAT. The last day you can notify HMRC of an intention to take part in the VAT Initiative is 30 September 2011. The deadline for returning the completed VAT registration form (VAT1) to HMRC is 31 December 2011.

Upcoming campaigns

More campaigns are expected to begin later this year and throughout 2012 to target the following areas:

• Individuals that provide private tuition and coaching without declaring their
income.
• Individuals and businesses that buy and sell goods online as a trade and who
fail to pay the tax due.
• Other business sectors where there is evidence of tax evasion. This campaign
will be based on HMRC's campaign to target plumbers and give an opportunity to other groups of tradespeople to come forward and declare unpaid tax.

Any individual or business that has deliberately evaded tax should take immediate action to make a pre-emptive voluntary disclosure to HMRC.

Please contact us if you need more information or advice on any of these issues.

Submitted by MSB Accounting on Monday 5th September 2011