1. Strengthening civil penalties for offshore tax evasion
Civil penalties for offshore tax evasion will be enhanced. The Chancellor confirmed that the offshore penalties regime will be extended to include inheritance tax, and to apply to domestic offences where the proceeds of the offence are kept offshore. The government will also update its territory classification system to reflect the adoption of the new global standard for the automatic exchange of tax information. These measures will take effect from April 2016.
The government intends to introduce a new aggravated penalty of up to 50% of the unpaid tax for moving funds hidden offshore, to take effect from Royal Assent to the Finance Bill 2015. The government’s original proposal to introduce a new criminal offence of failing to declare taxable offshore income and gains appears to have been dropped. HMRC will also review its existing framework for offering information on offshore tax evaders, particularly those who remain outside international efforts to achieve tax transparency.
2. Closure of one or more aspects of tax enquiry to be allowed
There will be a consultation on a new power to enable HMRC to close one or more aspects of a tax enquiry while leaving other aspects open.
The proposed introduction of the new power should be welcomed to facilitate the speedier resolution of enquiries.
3. Direct recovery of debts: safeguards confirmed
Confirmation that the direct recovery of debts (DRD) legislation to be introduced in a Finance Bill in 2015 will include a number of safeguards to protect against errors and to improve independent oversight.
4. Integration of debt collection
The government will work with the private sector to introduce a single, co-ordinated approach to debt collection, using a variety of debt collection services. Although HMRC already employs private sector debt collection services, going forwards, it will do so using a single “debt market integrator”.
5. OTS recommendations on competitiveness of UK tax system
The government has adopted the vast majority of the recommendations made by the Office of Tax Simplification (OTS) to improve the competitiveness of the UK’s tax system. The report, made 50 “key” and a number of “other” recommendations over a wide range of taxes.
The government has adopted 51 out of 58 of the OTS’s recommendations and has already started work on a number of them. No details of which recommendations have been adopted have been announced, but further details will no doubt be published in due course.
6. Improvements to HMRC processes
HMRC is to introduce a new mid-size business unit, which will provide a gateway to the specialist tax help needed by mid-size businesses. This is to include temporary access to a named individual for mid-size businesses going through a key business change with significant tax implications. HMRC is testing this approach and intends to launch it in 2015. HMRC is also piloting a new model to support the fastest growing businesses.
The government is also to increase HMRC’s resources within its Large Business Directorate to improve compliance by the UK’s “largest and riskiest” businesses. This is to take the form of the recruitment of additional staff, working in the Large Business Directorate, from April 2015.