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.
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.
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.