In January, France agreed to return the data to Switzerland but said it would use the information to pursue tax evaders in France.

HM Revenue & Customs has said it is aware of the case and while declining to comment on whether it would pay money to get hold of the data is said to have commented that they would not rule anything out and are constantly gathering information.

HMRC paid a reported £100,000 for similar data stolen by an employee of a Liechtenstein bank two years ago.

Anyone who has funds in Switzerland which has not been fully declared to HMRC should consider making a disclosure now. For help and advice on the issues and opportunities contact Iain Macleod at 07920 1469800 or imacleod@edftax.co.uk

The Chancellor announced in his Pre-Budget Report 2009 that HMRC is to apply a more consistent approach to the collection of debts in litigation.

At present, HMRC must repay overpaid tax where there is a judgment in favour of a taxpayer, even though that judgment is subject to appeal. However where HMRC receives a judgment in its favour they do not consistently collect the tax before the appeal is heard.

HMRC has therefore decided to move to a more consistent approach, under which payment of tax will normally be required in all such cases. This change will take effect in relation to all decisions made by the Tribunals or Courts on or after 1 April 2010.

A party to litigation is legally bound to accept the judgment of a tribunal or court, even though they may be appealing against it.

HMRC will not enforce payment in cases where an agreement not to do so had been made with the appellant before 9 December 2009 (the date of the Pre-Budget Report)

Further information can be seen via the following link:

http://www.hmrc.gov.uk/complaints-appeals/tax-under-appeal.htm

• False Self Employment in Construction
• Social Security (Categorisation of Earners) Regulations relating to teachers, lecturers and instructors

Construction

Briefly, this relates to proposals to bring construction workers in the mainstream construction industry into PAYE and Class 1 NIC (Employer’s and Employee’s) unless they meet certain criteria relating to providing their own materials, equipment or labour. Based on the responses they received, HMRC now believes that it needs more time to consider this and will consult further. However, it believes that the principle of a legislative solution is the correct one so we can expect to hear more about this in due course. No detailed indication of timing has been provided, although HMRC has said that it would wait until the economic recovery position is stronger.

Teachers, Lecturers and Instructors 

This relates to proposals to amend the regulations relating to individuals who work as teachers, lecturers or instructors on a self-employed basis, but who must nevertheless pay Class 1 NIC as a result of the 1978 Social Security (Categorisation of Earners) Regulations.  Briefly, HMRC had intended that the regulations would be amended from 6th April 2010 which would bring within the regulations all teaching/lecturing/instruction of an academic or vocational nature, but would exclude that which was recreational. Also, these regulations would apply wherever the teaching was given (unless in a private dwelling and payment was made directly to the teacher).  HMRC has now said that, based on the responses it has received, it also needs more time to consider this and will consult further.

For the time being the current regulations continue to apply and, despite the fact that HMRC is considering this further, the regulations do continue to apply in the vast majority of cases where teaching, lecturing and instruction is provided. 

Full details are available via the attached link, which takes you to the HMRC news page. The Construction response was on 10th March and the Teachers/lecturers response was on 8th March

http://www.hmrc.gov.uk/news/index.htm

If you think you may be affected by this and need to consider it in more detail relating to your organisation’s position, please contact John Harling on 07768 446381 or e-mail jharling@edftax.co.uk

Although this amnesty has not yet been confirmed, our thoughts are that if reports are correct, gas fitters will be allowed a period of time to register and then disclose any tax irregularities, which would be subject to a lesser penalty than the maximum 100% penalty which is the norm. 

This is part of HMRC’s clamp down on unpaid taxes, where it has been executing its rights under “powers of information” to obtain details from a variety of sources to check on earnings and run comparisons against tax declarations for various professional and industry sectors.

Undoubtedly some individuals may be worried about dealing with the HMRC under such circumstances therefore it is advisable to speak with a specialist tax adviser who can help as a guide through the process. For help and advice contact Iain Macleod at EDF Tax on 07920 146800 or email imacleod@edftax.co.uk.

This follows the recent announcement that tax relief is to be restricted to the basic rate from April 2011 to those participating in qualifying childcare voucher and employer-contracted childcare arrangements for the first time.  This does not affect the exemption regarding workplace nurseries.

The technical note gives guidance on the practicalities of what employers will be required to do to ensure that relief is only at the basic rate.  It will involve estimating an employee’s basic pay and benefits in kind for the year and then calculating the amount of tax free vouchers they can receive according to their marginal tax rate. Therefore, a basic rate tax payer will still be able to receive £55 per week tax-free, whilst a higher rate tax payer will only be able to receive £28 and an additional rate payer (the 50% band) will receive £22.

Full details are available via the attached link http://www.hmrc.gov.uk/employers/employersupportedchildcare.pdf

If you are likely to be affected by this and have any queries please contact John Harling on 07768 446381 or 0115 983 5580 or email jharling@edftax.co.uk

The consultation was issued on 11th February 2010 (link available below).  In summary, the Government proposes that subsistence allowances, which are free of tax/NIC, will not count for National Minimum Wage purposes.  As a result, whilst there are no changes being proposed to the rules regarding tax/NIC and travelling, it will not be possible to implement such schemes where the employees’ basic pay is reduced below National Minimum Wage levels. 

If you would like further information then please contact John Harling on 0115 983 5580 or email jharling@edftax@co.uk 

http://www.hm-treasury.gov.uk/consult_minimumwage_expenses.htm

• enable HMRC to access the working papers of tax agents who engage in deliberate wrongdoing which leads or is intended to lead to a loss of tax; and
• make a tax agent who has been involved in deliberate wrongdoing liable to a penalty of up to 100% of the tax related to each client affected by the wrongdoing- capped at £50K pa.

The trigger to access working papers and for liability to penalty will be the same. It will be deliberate wrongdoing by the tax agent intended to cause a loss of tax. This is broadly the same test as applies for direct taxes currently under sections 20A and 99 of the Taxes Management Act 1970.

HMRC would welcome views and feedback on any aspect of the draft legislation. Comments should be received by 3 March 2010. They may be made:

by email to: powers.review-of-hmrc@hmrc.gsi.gov.uk;

or by post to: HMRC review of powers: penalties Room 1/72, 100 Parliament Street, London SW1A 2BQ;

Common errors to look out for

The most common errors, according to the CIOT, are as follows:

• Only one job or private pension, but have received more than one coding notice;
• A coding notice does not refer to a current job;
• Under 65 but the code given is not 647L (or another letter). You may have adjustments to this figure in which case check them carefully;
• A basic rate taxpayer given a D0 code (40%) based on falsely estimated high earnings; and
• More than one job but the free pay allocated to one job is more than the expected income, which would waste some personal allowances.

What to do next?

If you do have clients with incorrect coding notices, you can call the number on the notice or you can call HMRC on 0845 3000 627. 

If you would like some help on this issue please contact us on 0115 983 5580 and we would be happy to assist.

In the 2008 Finance Act, HMRC countered the use of the scheme by issuing retrospective legislation against certain offshore structures, and it was the retrospective nature of the legislation which was challenged in judicial review proceedings in the case of Huitson v HMRC, EWHC[2010] EWHC 97 (Admin).  

The challenge was on the basis that Parliament’s action was disproportionate and contrary to the European Convention of Human Rights -A1P1.

Kenneth Parker J concluded that the public policy of ensuring Double Taxation Treaties only prevented double taxation meant that the State’s response was not disproportionate. Therefore judicial review was refused.

This decision however may not prevent other challenges to retrospective legislation due to the judge’s strong emphasis on the public policy of maintaining the integrity of Double Taxation Treaties. Indeed it may help such challenges.

HMRC have been investigating doctors over the last two years and claim to have obtained many large payments, covering several years and including penalties.

HMRC have now announced the Tax Health Plan (THP).

This allows doctors and dentists (unless they are under investigation already) to make a disclosure of any tax problems and to pay the tax, plus a fixed 10% penalty, without an intrusive, stressful and expensive investigation. It is very likely that HMRC will accept any disclosure made, so long as it is correct and complete.

The THP opened on 11 January 2010. Users must notify HMRC by 31 March 2010 of their intention to make a disclosure. Details of the disclosure and payment must be made by 30 June 2010.

For those who don’t disclose, HMRC investigations will begin after the notification window closes on 31 March.  So the timetable is tight for doctors and dentists to take advantage of what looks like a great opportunity.

For advice on the THP, a free initial consultation and help with a disclosure under the THP call Iain Macleod on 07920 146800 or e-mail imacleod@edftax.co.uk or alternatively complete our enquiry form.

Further advice can be found in our Frequently Asked Questions area.

Dave Hartnett, HMRC’s Permanent Secretary for Tax, said:

“Now the NDO is closed, HMRC is beginning the job of using the data we have obtained from banks to identify people who have not made disclosures despite having hidden their money offshore. We are starting our investigations and penalties can be up to 100 per cent of the tax not paid. But it’s very important to remember that, when someone comes forward voluntarily, the penalty is always lower than when we catch the evader. This means it’s still well worth contacting HMRC if you have undisclosed offshore accounts.

We are also examining information about offshore accounts in order to help us identify intermediaries who have assisted UK residents in hiding money offshore.” 

For professional, confidential and specialist advice call Iain Macleod at EDF Tax LLP on 07920 146800, or email imacleod@edftax.co.uk or complete our enquiry form. 

Offshore account holders in the UK and those with accounts in Liechtenstein have one final opportunity to put their tax affairs in order.  Recent announcements by HMRC have confirmed two amnesty opportunities.

The New Disclosure Opportunity

The New Disclosure Opportunity (NDO) enables UK taxpayers with offshore accounts to voluntarily disclose previously undeclared tax to HM Revenue & Customs.

If tax, interest and a reduced penalty are settled by 12 March 2010, HMRC are likely to accept the figures and move on.  Otherwise HMRC may pursue an investigation and in a few cases individuals may risk prosecution.

Time is limited to take action - an NDO notification of the intention to disclose had to be made to HMRC between 1 September and 4 January 2010. 

Then participants must make the full disclosure and payment by 31 January 2010 if on paper and 12 March 2010 if online.

The Liechtenstein Disclosure Facility

A special tax amnesty - the Liechtenstein Disclosure Facility (LDF) - for UK residents with funds in Liechtenstein has been announced by HMRC. 

UK taxpayers will avoid a criminal prosecution if a complete and voluntary disclosure is made - the only exception to this being if the source of funds is criminal property.  However, those already under investigation by HMRC will not be able to take advantage of the LDF.

Also the LDF will only seek to collect tax for ten years as against twenty under the NDO and the penalty will be restricted to 10% with some exceptions.

The LDF runs from 1 September 2009 until 31 March 2015.  New agreements between the UK and Liechtenstein means that there will be a five-year compliance programme, after which it is expected that no UK residents will use Liechtenstein to evade UK tax.

How can EDF tax help?

Our Head of Tax Investigations had considerable experience and success during the 2007 Offshore Disclosure Facility.  We can help you now.

It is time for you to act now.  For professional, confidential and specialist advice on your next steps call Iain Macleod at EDF Tax LLP on 07920 146800, or email imacleod@edftax.co.uk or complete our enquiry form. 

If you would like further information then please contact John Harling on 0115 983 5580 or email jharling@edftax@co.uk.

Pre Budget Report Summary

Penalties

 - For tax periods commencing from 1 April 2011 subject to a reasonable excuse provision, all offshore non-compliance will attract penalties at the same scale as domestic penalties for deliberate non-compliance. So the lower penalty for carelessness will not be available. This would mean the non-compliant would be liable for minimum tax-geared penalties of:

• 20 per cent where there is an unprompted disclosure;
• 35 per cent where there is a prompted disclosure;
• 70 per cent where there is no disclosure;
• up to 100 per cent where the non-compliance was not disclosed and had been concealed.

- For periods between April 2009 and April 2011, where undeclared offshore income or gains are uncovered, HMRC would seek penalties under Schedule 24 to Finance Act 2007 on the basis that the non-compliance is deliberate- so it would be possible to argue for non deliberate error. These penalties are as above.

- For periods prior to April 2009, HMRC will view non-compliance involving an offshore element as conduct of the utmost gravity, and will seek penalties accordingly. The maximum penalty prior to the introduction of the new FA 2008 penalties was 100 per cent. The effect of this could mean that penalties associated with offshore evasion where someone didn’t take advantage of the New Disclosure Opportunity or the Liechtenstein Disclosure Facility could easily be over 50% of the tax evaded.

Disclosure of Offshore Accounts

- Offshore accounts in jurisdictions where there is no suitable exchange of tax information agreement where substantial sums would have to be disclosed to HMRC within 60 days of being notifiable. Failure to notify would be subject to penalties which in the worst cases would be tax geared.

“Any penalty charged for late notification to HMRC of the existence of an overseas account would be in addition to any penalty that may arise from an under-declaration of tax. Thus, a taxpayer seeking to evade tax by failing to declare the existence of an overseas account or the interest arising from it could be subject to two separate tax-geared penalties.

In the most serious cases of tax evasion, the sum of these two penalties could reach 200 per cent of the tax evaded.”

The Consultation Document can be accessed via the following link:

http://www.hmrc.gov.uk/pbr2009/offshore-tax-evasion-5350.pdf

Please call Iain Macleod on 07920 146800 for a free confidential discussion or email imacleod@edftax.co.uk.

Up until now the motor and travel expense claims have been the primary risk areas identified by HMRC, but the emphasis will change in the New Year. HMRC has issued formal notices to BUPA, Sun Life and other institutions who pay commission to Hospital Consultants to identify enquiry cases where the commissions appear to have either been understated or omitted from Tax Returns.

The motor and travel expense claims will feature as part of the overall enquiry strategy into Hospital Consultants, with the outcome of a test Tribunal case due around the same time in early 2010.

HMRC has also widened the scope of its activities into the medical profession as a whole and has launched widespread status enquiries, as well as investigations into NHS Trusts.

We understand that in the South West, HMRC are targeting Veterinary practices and the enquiries all include common themes relating to the use of Locums and staff accommodation. At present this is believed to be a regional ‘project’ being conducted by HMRC but this could be rolled out nationally if common errors arise or the yield obtained is significant. At the start of a Veterinary enquiry, HMRC are issuing a standard questionnaire to help assess the potential risks.

Another current target of HMRC is Fish & Chip shops. We have identified a marked increase in the number of claims being received in respect of this trade.

If you have any queries regarding the above please call Iain Macleod on 07920 146800 or email imacleod@edftax.co.uk.

Previously, a month’s notice has been given by HMRC of the amended rates to allow employers to update their systems; however, this has not been the case with the latest changes. 

Therefore, where employers reimburse employees for business journeys, HMRC has advised that if employers need time to update their systems then they are not obliged to operate the new rates immediately as long as the new rates are not exceeded.  However, HMRC has also warned that where the rates are used for the employees to repay the employer for private journeys the full published rates must be used to avoid incurring a fuel benefit charge.  As a result, it may be necessary to seek additional payments from employees in certain cases.

Full details are available via the attached link:

http://www.edftax.co.uk/exchweb/bin/redir.asp?URL=http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

If you would like further information then please contact John Harling on 0115 983 5580 or email jharling@edftax@co.uk

The LDF is a special service to support the reviews to be carried out by Financial Intermediaries in Liechtenstein to identify those who may have liability to UK tax. The LDF allows people with unpaid tax linked to investments or assets in Liechtenstein to settle their tax liability under this special arrangement.

The LDF will run from 1 September 2009 until 31 March 2015. To help prepare in the run up to the registration date basic information will be posted on the HMRC website for anyone who thinks they may qualify to register, or if you are a tax agent or adviser with clients that may qualify to register.

HMRC has provided answers to some questions people may have about the LDF. One version is aimed specifically at Tax agents and advisers.

LDF Frequently Asked Questions (PDF 50KB)
LDF Frequently Asked Questions for tax agents and advisers (PDF 39KB)

Telephone helpdesk

HMRC has set up a telephone helpdesk to provide help and advice on the LDF.

Tel: 0845 600 4680

If you’re calling from outside the UK, please call:

Tel: +44 151 300 2750

Lines are open from 8.30 am to 5.00 pm (UK local time), Monday to Friday.

By post

Alternatively you can write to HMRC at the following address:

HM Revenue & Customs
Liechtenstein Team
7th Floor
The Triad
Stanley Road
Bootle
Merseyside
L75 2EE

Please call Iain Macleod on 07920 146800 for a free confidential discussion or email imacleod@edftax.co.uk

The deadlines for making the disclosure haven’t changed however. They remain 31 January 2010 (if made on paper) and 12 March 2010 (if made online) .

The registration extension is said to be because banks haven’t had enough time to notify their clients that they might be affected.

Dave Hartnett, HMRC’s Permanent Secretary for Tax is reported to have said:

“We know that some bank customers will not be contacted by their banks in good time for the original deadline of 30 November so in the interests of fairness we have decided to extend our deadline by a month to 4 January. 

“I strongly urge anyone who has been hiding taxable assets offshore to go on line and register. The NDO is voluntary but from the start of the New Year we will begin to investigate those who were eligible to use the NDO but instead buried their heads in the sand. Don’t let that happen to you.

“This is a great way to start the New Year - with the knowledge that your tax affairs are in order and the certainty that the penalty will be capped at 10 percent.”

The HMRC news release can be accessed at:

http://nds.coi.gov.uk/clientmicrosite/Content/Detail.aspx?ClientId=257&NewsAreaId=2&ReleaseID=409021&SubjectId=36

Please call Iain Macleod on 07920 146800 for a free confidential discussion or email imacleod@edftax.co.uk

The content of the two Briefs would appear to be virtually identical apart from the fact that a footnote has been added to the later Brief giving equivalent references to sections of the Corporation Tax Act 2009 for accounting periods ending on or after 1 April 2009 and to sections of the Income Tax (Trading and Other Income) Act 2005 for tax years 2005-06 onwards.

The Briefs confirm the approach HMRC have taken for some time which is that HMRC contend that payments by a close company may bring about a lifetime IHT charge on the participators.

The Brief can be accessed at

http://www.hmrc.gov.uk/briefs/inheritance-tax/brief6109.htm

We do not share HMRC’s views on this and believe that HMRC would not be successful in their arguments on this matter.

For a more detailed discussion on this and on other tax planning advice please contact Paul Merrell on 0115 983 5580 or email pmerrell@edftax.co.uk

The primary objective of the scheme was to use corresponding deficiency relief to reduce the liability to higher rate income tax for UK resident individuals.  The scheme involved a part-surrender of certain single premium “non-qualifying” life assurance policies, followed by a full surrender by the individual investor who could then claim the relief.

The Court allowed the appeal on behalf of the taxpayer, enabling the loss to be claimed. 

Dave Hartnett, HMRC’s Permanent Secretary for Tax, was quoted as saying:

“We want to make it as easy as possible to come forward, make a full disclosure and benefit from the limited penalty. The NDO is already a straightforward process and our new web site is easy to use. But the NDO is a time limited opportunity and will be the last one for offshore account holders so I strongly urge anyone who is concerned about tax liabilities arising from offshore investments to log on. 

This is the first step in a simple process that will enable those with undisclosed offshore assets to avoid the necessity of a full tax investigation together with much higher penalties.”

More details and information booklets are available at:

http://www.edftax.co.uk/exchweb/bin/redir.asp?URL=http://www.hmrc.gov.uk/offshoreaccounts/offshore-ndo.htm

Please call Iain Macleod on 07920 146800 for a free confidential discussion or email imacleod@edftax.co.uk.

The Banking Code of Practice to which he referred is intended to be voluntary. If Banks do sign up to the final version than according to the Financial Secretary it is likely other bodies will be confronted with similar voluntary Codes.

HMRC had published A Consultative Document on a Code of Practice on Taxation for Banks on 29 June 2009 http://www.tax.org.uk/attach.pl/8285/9731/CodeOfPracticeOnTaxationForBanks300609.pdf

and responses were requested  by 25 September 2009.

As the Consultative Document places considerable emphasis on banks abiding by the intentions of parliament as well as the letter of the law it has aroused considerable comment and concern.

On 22 September the Chartered Institute of Taxation published its response to the Banking Code of Practice Consultation Document.

http://www.tax.org.uk/attach.pl/8285/10070/BankingCOP%20final220909.pdf

The Chartered Institute of Taxation says,

” We strongly oppose a code that tries to override statute as the governing force of taxation in the UK. We have long objected to “tax by law, untaxed by concession”; we similarly oppose a code that seems to attempt to “tax by code that which is untaxed by law”. …, we believe that taxation by intention of Parliament, in the sense that we understand is meant by HMRC in the COP, is impractical.”

And go on to say,

“Lord Hoffmann, in his 2004 Goode lecture, set out very clearly the view of the judiciary on any arguments over looking behind the letter of the taxing statute: “The only way that Parliament can express an intention to impose a tax is by a statute which means that such a tax is to be imposed.” We wholly support this stance and consider that HMRC have not made a case for departing from it.”

The Chartered Institute of Taxation makes the telling point:

“The challenge in operating a code that is dependent on terms such as “intention of Parliament” is to give taxpayers the certainty they need for their commercial operations. This extends to making sure that the UK is not disadvantaged. Banking is a very international business; if the UK comes to be seen as an uncertain jurisdiction, prone to change its tax rules and so lacking certainty for businesses, business will leave the UK.”

http://www.hm-treasury.gov.uk/speech_fst_210909.htm

The FST suggests that the government has plans to tackle tax avoidance by

• Rigorous investigation of existing schemes- with a particular emphasis on information powers
• Tightening the tax avoidance disclosure requirements so that there will be more disclosures and so HMRC will be sure they know who is using schemes
• Principles based legislation - although he recognised this was difficult to get right
• Codes of conduct like the Banking Code of Conduct

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_ShowContent&propertyType=document&columns=1&id=HMCE_PROD1_029639

• and what may come from the Consultation Document on Working with Tax Agents

http://www.hmrc.gov.uk/about/tax-agents.htm

He did not mention retrospective legislation.

The Financial Secretary also talked of relentless pursuit of tax evasion- whether in the UK or offshore. He claimed HMRC obtained an extra £12 billion last year from  ”compliance interventions”. He also said,

“This summer, HMRC served notices on 308 other financial institutions to hand over details of those who are cheating on tax by hiding income and gains in offshore accounts.  This New Disclosure Opportunity offers a further, final opportunity to come forward on advantageous terms.  In the Pre-Budget Report we will spell out the consequences for those who don’t.”

HMRC say

“If you have unpaid tax linked to an offshore account or asset to declare you will need to notify us AND disclose (tell us the details, calculate the amount due and make a full payment) to benefit from the terms of NDO.”

HM Revenue & Customs (HMRC) is providing this opportunity on favourable terms for customers with an offshore account or asset, linked directly or indirectly to a loss of United Kingdom tax. You can come forward voluntarily and put your affairs in order.

HMRC will not offer these preferential terms to offshore account and asset holders again.

To take advantage of the New Disclosure Opportunity (NDO) customers must notify HMRC by 30 November 2009 of their intention to make a disclosure. This is a simple process. At this stage you do not need to provide any details of the tax you believe you owe.

You can Notify:

• By phone on 0845 302 1401 (international +44 1506 476 094)
• By post completing the relevant part of either form NDO2 or NDO3 in the booklet ‘Completing the disclosure forms’
• By email - electronically complete the information required in a Notification eform before October 2009
• Online using the NDO online service from October 2009

You can Disclose and pay

• By post until 31 January 2010 - you must use the forms contained in NDO1(F).
• Online until 12 March 2010 - the NDO online service is available from 1 October 2009”

More details and information booklets are available at:

http://www.hmrc.gov.uk/offshoreaccounts/offshore-ndo.htm

Please call Iain Macleod on 07920 146800 for a free confidential discussion or email imacleod@edftax.co.uk.

The LDF is a special service to support the reviews to be carried out by Financial Intermediaries in Liechtenstein to identify those who may have liability to UK tax. The LDF allows people with unpaid tax linked to investments or assets in Liechtenstein to settle their tax liability under this special arrangement.

The LDF will run from 1 September 2009 until 31 March 2015. To help prepare in the run up to the registration date basic information will be posted on the HMRC website for anyone who thinks they may qualify to register, or if you are a tax agent or adviser with clients that may qualify to register.

HMRC has provided answers to some questions people may have about the LDF. One version is aimed specifically at Tax agents and advisers.

LDF Frequently Asked Questions (PDF 50KB)
LDF Frequently Asked Questions for tax agents and advisers (PDF 39KB)

Telephone helpdesk

HMRC has set up a telephone helpdesk to provide help and advice on the LDF.

Tel: 0845 600 4680

If you’re calling from outside the UK, please call:

Tel: +44 151 300 2750

Lines are open from 8.30 am to 5.00 pm (UK local time), Monday to Friday.

By post

Alternatively you can write to HMRC at the following address:

HM Revenue & Customs
Liechtenstein Team
7th Floor
The Triad
Stanley Road
Bootle
Merseyside
L75 2EE

Please call Iain Macleod on 07920 146800 for a free confidential discussion or email imacleod@edftax.co.uk

The HMRC information can be accessed at

http://www.hmrc.gov.uk/offshoreaccounts/offshore-ndo.htm

Please click here to view FAQs regarding the New Disclosure Opportunity.

Please call Iain Macleod on 07920 146800 for a free confidential discussion or email imacleod@edftax.co.uk.

The spotlight can be accessed at

http://www.hmrc.gov.uk/avoidance/spotlights.htm

Spotlights were introduced in the 2009 Budget to highlight a selection of activities which, in HMRC’s view, are not likely to have the legal effect desired by those thinking of using them.

Needless to say, neither we, nor leading Tax Counsel share the views outlined by HMRC in Spotlight 5, and continue to believe our Employee Benefit Trust arrangements are technically robust and would stand up to scrutiny. 

For a more detailed discussion on this and on other tax planning advice please contact Paul Merrell on 0115 983 5580 or email pmerrell@edftax.co.uk

http://www.hmrc.gov.uk/news/index.htm

Mr Hartnett details in the podcast that those who have used offshore accounts to evade paying UK tax and who do not take advantage of the disclosure opportunity will face much higher penalties and an increased risk of prosecution. He said HMRC’s very clear plan was not to offer a similar disclosure opportunity in the future.  The opportunity was being only being offered now because HMRC had received information from the majority of UK banks about their customers offshore accounts.

Mr Hartnett also said that those who had done nothing wrong had no need to contact HMRC.

For those who had to make the disclosure the “best place to go for help was a reputable, experienced tax adviser.”

Please call Iain Macleod on 07920 146800 for a free confidential discussion or email imacleod@edftax.co.uk.

Telephone helpdesk - 0845 600 4680 (or +44 151 300 2750 if you are calling from outside the UK)

Lines are open from 8.30 am to 5.00 pm (GMT), Monday to Friday.

Alternatively you can contact HMRC by post at the following address:

HM Revenue & Customs
Liechtenstein Team
7th Floor
The Triad
Stanley Road
Bootle
Merseyside
L75 2EE

Please call Iain Macleod on                07920 146800         for a free confidential discussion or email imacleod@edftax.co.uk

The brief can be accessed at

http://www.hmrc.gov.uk/briefs/inheritance-tax/brief4909.htm

We do not share HMRC’s views on this and believe that HMRC would not be successful in their arguments on this matter.

For a more detailed discussion on this and on other tax planning advice please contact Paul Merrell on 0115 983 5580 or email pmerrell@edftax.co.uk

Cronin, who ran two security systems firms in Worcester, pleaded guilty to two counts of cheating the public revenue and two further counts relating to VAT payments. Over many years, the defendant had diverted company income into his own personal off-shore bank account in Jersey. He would ask customers to make cheques payable to him personally rather than to his business and these sums would not pass through the books and records of the company.

In court, the RPCO’s prosecutors presented evidence of a complex direct tax fraud going back several years. The complexity and absence of some documentation, as well as the fact that the Jersey account was used for honest transactions as well as dishonest ones, necessitated the instruction of a forensic accountant.

When interviewed, Cronin said that no “significant” amounts of money had been involved. Although individual sums were relatively small, over the course of six years of trading, Cronin siphoned off money amounting to a very significant tax loss of over £98,000. Jonathan Cronin was sentenced to 18 months in jail. The RCPO say confiscation proceedings will be brought against Cronin to ensure that the money lost is returned to the public purse. The RCPO also made a successful application to have Cronin disqualified from acting as a company director for five years from 13 March 2009.

For further information see:

http://www.rcpo.gov.uk/en-gb/MediaCentre/Studies/Pages/Businessmanconvictedof

It has been decided in accordance with the Code for Crown Prosecutors that, in relation to two employees of Birmingham City Football Club, criminal proceedings will not be instituted against them.

A review of the evidence against individuals associated with another football club is being conducted, and a decision as to whether criminal proceedings will be instituted against them is yet to be made.

But for others who have yet to disclose this is a great opportunity.

Under the LDF HMRC say there will be no criminal prosecution if a complete and voluntary disclosure is made; the only exception to this promise is if the source of funds is criminal property (S340 Proceeds of Crime Act 2002).

Also, the LDF will only seek to collect tax for ten years as against twenty under the New Disclosure Opportunity (NDO) and the penalty will be restricted to 10%. There are exceptions to the 10% penalty. If the person concerned was contacted by HMRC under the 1997 Offshore Disclosure Facility then the penalty will be 20%. If the person was previously investigated and failed to disclose Liechtenstein assets then the penalty will be “significantly higher”. But if the person can show the understatement of UK tax was due to innocent error HMRC will seek only six years of tax and no penalty.

In some case a simple composite rate can be used which will make quantification much easier.

Under new agreements between the UK and Liechtenstein the principality will introduce a five year compliance programme the objective of which is that after five years no UK people will use Liechtenstein to evade UK tax. Financial intermediaries in Liechtenstein will have a duty to identify those who they think have UK liabilities and, for those who refuse to comply with a new certification process, to refuse to act. Incentives and sanctions such as fines on the property are being considered to encourage people to comply. Also, a Tax Exchange Information Agreement with Liechtenstein has been agreed and a Double Taxation Agreement will be negotiated.

HMRC say “The LDF is a special service to support the reviews to be carried out by the Financial Intermediaries in Liechtenstein to identify those who may have liability to UK tax. The LDF allows people with unpaid tax linked to investments or assets in Liechtenstein to settle their tax liability under this special arrangement.”

The LDF will run from 1 September 2009 until 31 March 2015. The Liechtenstein Help Desk and telephone lines will be open from 1 September 2009. However, the NDO closes on 31 January 2010.

In the run up to the registration date HMRC will post on their website basic information about the LDF and FAQ’s for anyone who thinks they may qualify to register.

More details are available at

http://www.hmrc.gov.uk/international/liechtenstein.htm

Please call Iain Macleod on 07920 146800 for a free confidential discussion or email imacleod@edftax.co.uk

The Government will also be introducing changes to the current interest rates regime which aims to deliver greater transparency and certainty in the way that rates are set and applied. This will pave the way for the implementation of full interest harmonisation which was legislated for in this year’s Finance Bill.

More details can be found at:

 http://nds.coi.gov.uk/clientmicrosite/Content/Detail.aspx?ClientId=257&NewsAreaId=2&ReleaseID=405379&SubjectId=36

Case Summary:

Mr Bottomley was investigated by HMRC. He sought closure notices and these were issued showing increases to his declared profits. Appeals were heard by the General Commissioners and were rejected. Rather than appealing that decision, judicial review was sought on the basis that the Commissioners had shown bias. This was rejected by the Court.

Case Summary:

Mr Sokoya was under enquiry by HMRC who issued an information notice. As information was not supplied HMRC determined a £50 penalty. The Tribunal found that the information notice had not been complied with but that the penalty notice was invalid because of a dating error. 

In a nutshell, the proposal is that businesses whose ‘main business’ is carrying out or commissioning construction operations will have to operate PAYE and Class 1 NIC (employees’ and employer’s) in respect of construction workers unless one or more of three statutory criteria are met. These are as follows:

- the worker supplies plant and machinery (this does NOT include tools of the trade); or

- the worker supplies all the materials to do the work; or

- the worker engages other workers in undertaking the work and is responsible for paying them.

The proposal is that this will be enshrined in legislation rather than relying on case law to establish the correct employment status.  Of course, this is a proposal for consultation at present and there will no doubt be much detail to consider before it finally becomes law. 

Click here for the full consultation document.

If you would like further information then please contact John Harling on 0115 983 5580 or email jharling@edftax@co.uk.

The deadline for responding to the consultation is 12th October 2009.

The HMRC information can be accessed at

http://www.hmrc.gov.uk/offshoreaccounts/offshore-ndo.htm

Please click here to view FAQs regarding the New Disclosure Opportunity.

Please call Iain Macleod on 07920 146800 for a free confidential discussion or email imacleod@edftax.co.uk.

The New Disclosure Opportunity (NDO) enables UK taxpayers with offshore accounts to voluntarily disclose previously undeclared income and capital gains to HM Revenue & Customs. 

Risks if Disclosures are not made

If tax, interest and a reduced penalty are paid by 12 March 2010, HMRC are very likely to accept the figures and move on.

If individuals and companies fail to disclose they risk investigation by HMRC. In a few cases individuals might be prosecuted. 

Time is limited in which to take action as the scheme runs from autumn 2009 until 12 March 2010. 

There will be no more chances.

HMRC will “vigorously pursue” all defaulters

• HMRC possesses a growing amount of data from financial institutions on offshore account holders.

• HMRC already has details of 400,000 offshore bank accounts from 5 High Street Banks (obtained in 2006/07).

• In March 2009 it was agreed HMRC would have access to offshore account holders data held by 4 more financial institutions.

• HMRC is also pursuing another 50 institutions. Plus another 120 institutions are expected to provide data.

• In 2007 HMRC offered its first Offshore Disclosure Facility, to which 45,000 people responded. HMRC is now pursuing those who did not make a disclosure then and criminal prosecutions may arise.

New Disclosure Opportunity

Under the new opportunity the penalty level will be 10% of the affected tax/NIC for those who had no previous opportunity to disclose.  The penalty will be 20% for those who could have disclosed under the previous opportunity in 2007.   The maximum penalty in normal circumstances is 100%.

How can EDF tax help?

Our Head of Tax Investigations had considerable experience of and success with the 2007 disclosure facility. We can help you now.

It is time for you to act now.  For professional, confidential and specialist advice on your next steps call Iain Macleod at EDF Tax LLP, on mobile 07920 146800, email imacleod@edftax.co.uk or complete our enquiry form.

The 2009 Finance Act can be viewed at:  

http://www.opsi.gov.uk/acts/acts2009/pdf/ukpga_20090010_en.pdf

Case Summary:

Dr Banerjee was an employed doctor and a specialist in dermatology. She claimed expenses under what used to be S198 ICTA 1988 (now S336 ITEPA 2003) of attending educational courses, conferences and meetings, including associated costs of travel and accommodation. She won at the General Commissioners and HMRC appealed to the High Court.

There it was held that in attending the courses, which were mandatory, she was carrying out the duties of her employment and her exclusive purpose was to fulfil the duties of her employment. So she won. Her case was distinguished from the virtually identical case of Revenue & Customs Commissioners v Decadt [2007] EWHC 1659 (Ch), [2008] STC 1103.

Case Summary:

HMRC had been successful in defeating arguments that payment of remuneration in gold etc did not avoid employers NIC. But to collect the NIC the Limitation Act 1980 had to be considered. HMRC had taken steps to protect the position without taking Court action but these steps were not legally effective. It was held that agreements reached  between taxpayers and HMRC before HMRC become aware of the true legal position should stand.

Case Summary:

Following the Elida Gibbs and Fleming cases many businesses were able to claim overpaid VAT - in some cases back to 1973. HMRC paid simple interest on the repaid VAT but many businesses have claimed compound interest. Chalke & Barnes were sample cases as part of a Group Litigation Order. Henderson J held that following European Law and precedent compound interest was due. However, the Limitation Act 1980, which applies in England and Wales, meant that the claimants were out of time for compound interest to be paid.

Case Summary:

This case was about whether there had been a valid election and although there was no explicit document describing itself as an election the only way the figures in the tax return made sense was to assume an election had been made. Also as the assessment had been made on the basis of negligence S36(3) TMA 1970 admitted a late election.

“Large” isn’t that huge, being either more than 250 employees or turnover exceeding €50m and balance sheet value over €43m. There are about 10,000 businesses in the UK affected and the top 1,200 will have a dedicated Inspector- a Customer Relationship Manager (CRM). A lot of work has been done by HMRC on Risk Assessments. Some companies have found it helpful to be recognised as Low Risk by HMRC.

They key themes of this new relationship to which HMRC aspires are

• proportionate engagement
• speedier resolution of issues
• greater and earlier certainty
• greater clarity through effective consultation and dialogue

The governing document can be viewed at http://www.hmrc.gov.uk/large-business/rllb.pdf

EDF Tax can help with HMRC Risk Assessments, meetings with HMRC CRMs and support clients who aspire to Low Risk status. Call Iain Macleod at 07920 146800 or e-mail imacleod@edtax.co.uk for further information.

Case Summary:

Prudential claimed relief for front end payments in connection with foreign exchange hedging transactions. HMRC said deductible qualifying payments do not include the principal paid on the acquisition or sale of foreign currency. They were no more than prepayments of part of the final exchange of principal under the hedging agreements. The Court agreed with HMRC.

Case Summary:

Mr Drummond sought to cover a gain with a capital loss through a tax planning scheme involving the purchase and surrender by him of second-hand, non-qualifying life assurance policies. HMRC argued he had suffered no economic loss. HMRC won at the Special Commissioners and at the High Court. The Court of Appeal gave him permission to appeal to them but refused his appeal.

It was also decided that his fee of £210K was not wholly and exclusively for the purchase of the policies and not an allowable expense.

A person’s home, where it is their only or “main” residence, may be exempt from capital gains tax (CGT) on disposal. 

If someone has more than one home they can elect as to which home is their “main” residence for the purposes of CGT and will be, therefore, exempt on sale.  An election has to be made within two years of acquiring a second or other home.  Once an election has been made, it is possible to vary that election.  Whenever there is a change in the combination of residences a new period begins with a new opportunity to make a nomination.

For example, a person had a single residence until 1 April 2002. On that date she acquired a house and began to use it immediately as her second residence. She has until 31 March 2004 to nominate one of these residences as her main residence.

In 2005 she bought another house and began to use it on 1 July 2006 as a third residence. A new period begins in July 2006 and she has until 30 June 2008 to nominate one of these three residences as her main residence.

On 1 May 2009 she disposed of a residence. A new period begins and she has until 30 April 2011 to decide which of her remaining two houses is her main residence.

In some cases an individual may have more than one residence but not be aware of it. For example an individual may work in London from a weekly rented flat, where she spends most of her time, but own a country cottage which is used as her residence when her work allows.   If the flat is rented under a tenancy it counts as a residence for these purposes and an election can be made.

The extent of the garden or grounds of a person’s residence may affect the amount of relief available.

Having let out a home may not be a barrier to obtaining some relief from CGT on disposal; and in certain circumstances a dwelling house which is not a residence of an individual is treated as her residence for the purpose of computing private residence relief. These include persons currently living in job related accommodation, and for periods of absence because of working abroad.

For advice and assistance please contact Lindsey Sherman on 0115 983 5580 or lsherman@edftax.co.uk

From 6 April 2010 the furnished holiday letting (FHL) rules will be repealed because HMRC have operated them in a way that was potentially non-compliant with European law.  These measures currently treat landlords as trading for certain tax purposes provided that they satisfy certain conditions.  Until the FHL rules are repealed, HMRC will extend these rules to furnished holiday accommodation elsewhere in the EEA, but not outside it.  Furthermore there is scope to go back and amend previously submitted returns. 

Until 31 July 2009, HMRC will accept late amendments to:

• income tax and capital gains tax returns for the tax year ending 5 April 2007; and
• corporation tax returns for accounting periods ending on or after 31 December 2006.

The amendment must relate to one of the reliefs or other treatments available under the FHL rules, for a property situated in a country elsewhere within the EEA during the relevant period, and the letting meets all the other requirements of the FHL rules.

The reliefs include:

• Loss relief against general income;
• Pensionable profits;
• Various capitals tax reliefs, including entrepreneurs’ relief.

For advice and assistance please contact Lindsey Sherman on 07545 018438 or email lsherman@edftax.co.uk.

Chemists also applied for costs on the basis that the conduct of the Revenue in resisting disclosure of the SAR has been wholly unreasonable. But the Commissioner said:

“Whilst I understand the frustration of the Appellants that the Revenue have included in a witness statement references to anonymous allegations, I do not consider that the actions of the Revenue have been wholly unreasonable. Hearsay evidence is in principle admissible before the Special Commissioners, and the Revenue cannot be criticised merely for seeking to introduce such evidence. I also note that the Revenue have not resisted the disclosure of the SAR in the hearings before me. For these reasons I am not prepared to make an award of costs against them.”

1)     P11Ds/P9Ds

Care should be taken to ensure that the information reported on P11Ds/P9Ds is correct. For instance do you hold a valid dispensation that allows you to omit certain expenses from P11D such as travel, subsistence and entertaining? If not, you will need to include these items on the P11Ds. You may also wish to update your agreement with HMRC at the earliest opportunity to avoid having to report them in the future . Also, have benefits been reported correctly where these are calculated by reference to very specific rules, e.g. employer-provided cars (and, if appropriate, private fuel), living accommodation, relocation and beneficial loans?

2)     P35/P14 and P60s

The information reported on these forms relies upon accurate payroll recording, so it is important that these tally to the payroll records throughout the course of the year and are transferred correctly on to the appropriate year end forms.  For example, where an employee has been in receipt of Statutory Sick Pay, has this been paid in accordance with the rules taking into account waiting days and linked periods of sickness?  Also, you are advised to make sure you include on the P14/P60 relevant information such as Student Loan Deductions, Pension Scheme Contracting out Number (For Money Purchase/Stakeholder Schemes) and the employee’s final tax code. These areas are often overlooked.

3)     PAYE Settlement Agreements (PSAs)

PSAs enable employers to meet the tax/NIC liability arising on benefits in kind that are minor, irregular or impractical to calculate on P11D. On the one hand, it is important to ensure that the correct value of benefit is reported by grossing up the tax liability at the correct marginal rate and ensuring that Class 1B NICs are paid on the value of the grossed up benefit including the tax liability. On the other, it is possible that employers are including items in the PSA that it may actually be possible to exclude, because they are trivial or covered by a statutory exemption.

If you have provided benefits suitable for inclusion in a PSA, but have not yet registered an agreement with HMRC it is possible to do this up to and including 5^th July 2009 (of course, it is advisable to do this well before this date).

4)     Termination payments

In the current climate there have been more termination/redundancy payments and there is a (not very well known) statutory requirement to report these to HMRC by 6th July following the end of the tax year where the payment exceeds £30,000 and includes non-cash benefits. There is no specific form to make this return - a letter giving full details of the package should be sent to your PAYE tax office and copied to the individual concerned.

If you have any queries relating to this or PAYE/NIC, benefits or the Construction Industry Scheme, please contact John Harling on 07768 446381.

What is to be done? Well the answer is in the Treasury’s 268 page Report, HMRC’s 222 pages of Budget Notes  http://www.hmrc.gov.uk/budget2009/rn-complete.pdf, 42 pages of Press Notes, 3 Consultation Documents, 2 Reports and 8 Other Documents. The Finance Bill to deal with the 93 different items should be interesting.

For more information on the 2009 Budget Report, click here to visit our overview.

If Prizedome were right, the losses of a company before entering group 1 could not be offset but would be available once the group 2 takeover occurred. Lord Justice Mummery said:  

“This makes no sense and cannot have been intended by Parliament. Like the judge, I would uphold such a construction only if compelled to do so by the language of the statute. For the reasons that I have given, far from compelling this construction the language of the statute points the other way.”

As this was a unanimous Court of Appeal decision and upholding the High Court decision it would be surprising if Prizedome got leave to go to the House of Lords.

The Court refused his appeal. There was indeed an onus on the taxpayer to show HMRC’s assessments were wrong and Mr Rouf had erred by not giving evidence at the Commissioners hearing. Quoting an earlier case Lord Osborne said,

 ” if a taxpayer does not “come completely clean, and if he gives no evidence whatsoever he cannot be surprised if he is finally lumbered with more than he has in fact received”.

Although HMRC’s calculations were estimates and based on only three secret shopper visits there was nothing inherently irrational about the calculations and as Mr Rouf had given no evidence there was nothing to upset the assessments.

This case illustrates the importance of getting all the evidence out at the Commissioners or, as it will be from 1 April 2009, the First Tier Tribunal.

The Chancellor unveiled a £20bn package, effective until April 2010, supposedly designed to help individuals and businesses to weather the storm.  The measures announced are thus a mix of short term tax reductions and longer term tax increases.

The main tax proposals include the following:

• reduction in standard rate of VAT from 1 December 2008 to continue for 13 months
• The 2008/09 “one-off” increase in personal tax allowances (tax benefit £120) made permanent
• From 2011/12, the top rate of income tax will be 45% for taxable income over £150,000. Those with gross income of over £100,000 will see their personal allowance reduced or removed completely.
• From the same tax year, all the main national insurance contribution rates will rise by 0.5%.
• The 1p planned increase in the small companies’ rate of corporation tax will be deferred for one year. It will remain at 21% during 2009-2010
• new loss carry back provisions
• details of changes to capital allowances for cars.

VALUE ADDED TAX

The standard rate of value added tax (VAT) will be 15% from 1 December 2008 until 31 December 2009, reverting to 17.5% from 1 January 2010 in a move to stimulate spending.  No changes have been made to the 5% reduced or the 0% rate.

Suppliers will be able to apply the 15% VAT rate to invoices originally issued at 17.5% for goods and services they supplied after 30 November 2008. At the end of the temporary reduction period, measures will be introduced to ensure businesses cannot use artificial arrangements to reduce the VAT rate on goods or services to be provided after 31 December 2009.

In addition, a 2p per litre increase in fuel duty on petrol and diesel will take effect on 1 December 2008.

INCOME TAX

The government has announced significant changes to the system of personal allowances and tax rates for the next few years. These mainly impact on those with higher levels of income. These changes are set out below.

Allowances and rates

For the tax year 2009/10, the personal allowance will be increased by more than the rate of inflation to £6,475. The Chancellor decided not to claw back any of the increase announced in May that was intended to compensate for the abolition of the 10% rate band on non-savings income.

Changes for 2010/11

From 2010/11 the personal allowance will be subject to an income limit of £100,000. An individual’s personal allowance will be reduced by £1 for every £2 of gross income they have above the income limit up to a maximum reduction of half of the basic allowance.

For those with income of above a second income limit of £140,000 the amount of the allowance will be further reduced at the same rate until the allowance is extinguished.

Changes for 2011/12

An additional higher rate of income tax of 45% will be introduced for incomes above £150,000.  The corresponding rate for dividends will be 37.5%.

Trust Rates

From 2011/12, the tax rate for trusts will rise to 45%, with the dividend tax rate rising to 37.5%.

Allowances - personal and age-related allowances 2009-2010

NATIONAL INSURANCE

Several changes will be made to national insurance contributions (NICs) from 2011/12:

• The NICs starting point will be broadly aligned with the income tax personal allowance, as used to be the case before 2008/09.
• There will be a 0.5% increase in the employer, employee and self-employed rate of national insurance contributions (both main and additional rates).
• Class 4 self-employed NIC rates will also increase by 0.5% to 8.5% and 1.5%.

COMPANY CARS

A new emissions-based approach to tax relief will replace the existing regime for business cars. This will take place from 1 April for corporation tax and 6 April 2009 for income tax.

BUSINESS TAX

Corporation Tax Rates

The planned increase of the small companies’ rate from 21% to 22% will be deferred until 1 April 2010.

‘Income shifting’

The government intended that legislation would take effect from 6 April 2008 to address ‘income shifting’ ie shifting part of an individual’s income to someone else who is subject to a lower rate of tax.

The government has consulted on this issue but, given the current economic challenges, is deferring action and will not bring forward legislation in Finance Bill 2009. The issue will be kept under review.

Trading losses

Companies and unincorporated businesses will be able to carry back trading losses to set against their profits of up to three years earlier, subject to limitations.

• Losses carried back must first be set against profits of the preceding year. Then a maximum of £50,000 of the balance of unused losses will be available for carry-back to the earlier two years, taking the more recent year first.
• The £50,000 cap is reduced proportionately if the loss-making period is less than 12 months.
• For companies, the measure will have effect only for accounting periods ending in the period 24 November 2008 to 23 November 2009.
• For unincorporated businesses, it will apply to trading losses for the tax year 2008/09.

OTHER MATTERS

Child benefit and child tax credit

Child benefit increases from £18.80 per week to £20 per week for the first child (and from £12.55 to £13.20 per week for subsequent children) would be brought forward from April 2009 to January 2009.

The child element of child tax credit will be increased by £25 above indexation from April 2009 rather than April 2010. This means the child element will rise by £75 above indexation to £2,235.

Pensions and retirement

From April 2009, the basic state pension will rise to £95.25 per week for a single person and £152.30 for a married couple. A £60 one off payment will also be made in January 2009 to every individual entitled to the £10 Christmas bonus for pensioners. 

From April 2009, the Pension Credit minimum income guarantee would rise to £130 for single pensioners and £198.45 for couples.

Alcohol and cigarettes

Duty on alcohol and tobacco will be rise to match the cut in VAT. For cigarettes, this will take effect from 24 November 2008 and for alcohol, it will apply from 1 December 2008.

Vehicle Excise Duty (VED)

New VED rates, designed to encourage motorists to drive fuel-efficient vehicles, will be introduced in 2009 but there will be no significant rate changes until 2010.

Six new bands will be introduced in April 2009, taking the total to 13. However, VED rates will not increase by more than £5 for any car.

From April 2010, the government will start to separate out the 13 rates but no driver in a given band will pay more than £30 more in that year.

Readers will be aware of the current regime where there is little difference between the penalty for a simple error, classed as negligence and one for serious attempted tax fraud.  It is hoped that this new legislation will introduce a much fairer penalty system.

It is thought that HMRC believe that they hope to recoup in the region of £100m from the information they hold. However, if the offshore amnesty is anything to go by the actual amount recovered could be substantially less that this.