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Criminal Investigation powers to be extended


The Budget includes proposals to allow some of the powers already used by Customs and Excise in criminal investigations to also be available to Revenue officers, which is a concern. The powers may include the use of search warrants, being able to obtain evidence from people other than the suspect, and arrest, search and question suspects. The proposals are currently being consulted upon.

New penalties to be brought in

The Budget included proposals to standardise the penalty regime for income tax, corporation tax, PAYE and NIC as well as VAT. The penalty will be determined by the amount of tax understated, the reasons for the understatement and the extent of disclosure by the taxpayer. The new rules are expected to come into force for returns filed after 31st March 2009.

The proposals suggest that there will be;
  • no penalty where a taxpayer makes a mistake;
  • moderate penalties for failures to take reasonable care;
  • higher penalties for deliberate action; and
  • still higher penalties for deliberate action with concealment.

How this will work in practice is anyone’s guess at the moment, especially the factors that decide whether the error arose because of a genuine mistake or a taxpayer not taking reasonable care.

Online filing and relevant changes for tax returns

The enquiry windows for HM Revenue and Customs (HMRC) to seek to review Tax Returns for both Income Tax and Corporation Tax are to be linked to the date the returns are submitted from 2008, rather than the deadline by which they should be submitted.

From 2008, paper self assessment tax returns will need to be submitted to HMRC by 31st October 2008, and those filed online will need to be submitted by 31st January 2009.

The requirement to file all PAYE forms online during the tax year may well be introduced in phases from 2009. The requirements to file and pay online for VAT are expected to be phased in from 2010 and from 2011 Corporation Tax will follow. Many businesses and individuals may need to invest in technology merely to deal with HM Revenue and Customs in the future.