Failing to make a return, or withholding information
There are new penalties for failure to make a return and deliberately withholding information (Clause 30 and Schedules 11 and 12).
A points-based system will be introduced – good tax compliance behaviour can earn points to wipe out penalties from negative points issued for late filing.
The new penalties for failure to make a return will initially apply only to regular returns for VAT and income tax self-assessment.
Failing to pay tax
There are new penalties for failure to pay tax (Clause 31 and Schedule 13).
These penalties apply to corporation tax, income tax self-assessment and VAT. Companies in the Quarterly Instalment Payment regime for corporation tax will need to ensure they prepare proper estimates of the expected tax liability and pay QIPs based on these.
Up until now, the penalties that could be applied to late-paid QIPs were not applied. This new draft legislation may signal a tougher approach.
Share Option plans
Good news for owner-managers of businesses operating share option plans. New provisions will ensure that where such shareholders’ holdings in their personal companies are diluted below 5% as a result of the issue of shares wholly for cash and for commercial purposes, Entrepreneur’s Relief remains available. This should apply to dilution on the exercise of employee share options.
Employment Taxes: key areas of interest
- Benchmark /oversea rates – from April 2019 employers won’t be required to have a checking system to look at receipts. They will only be required to make sure the employee has undertaken a qualifying journey.
- From the tax year 2019-20 onwards, under Optional risk appraisal (Opra) the calculation of the amount foregone for a taxable car or van should be the total amount foregone, including any connected costs (such as insurance). Also, the deduction in any tax year for a capital contribution towards a taxable car will be automatically reduced on a pro-rata basis under the normal car benefit charge rules.
- Removal of income tax or National Insurance liability for charging electric vehicles ‘at or near the workplace’ with effect from 6 April 2018.
- Three revisions to the tax treatment of emergency vehicles:
Employer-paid premiums into life assurance products and employer contributions to certain overseas pension schemes – currently, premiums and contributions are only tax exempted if the named beneficiary is the employee or a member of the employee's family or household, but this clause will allow the named beneficiary to be any individual or registered charity.
- an extension to the current ‘on-call’ exemption to allow for ordinary commuting in an emergency vehicle when not on-call
- provisions to ignore fuel as an ‘additional expense’ in working out the tax charge if certain conditions are met
- transitional arrangements for the taxation of emergency vehicles for the period 6 April 2017 to 5 April 2020.