FBI
finance, banking & insurance
risk matters of routine. The second point to be aware of is just what is meant by a person’s ‘tax position’. This covers anything relating to payments between HMRC and taxpayers in either direction and covers the past, the present and the future. It would be hard to think of anything broader.
The vital point to bear in mind is that the new statutory minimum penalties are higher if disclosure of the inaccuracy is prompted. ‘Prompted’ means that a disclosure is made at a time when a person has reason to believe that HMRC has discovered – or is about to discover – the inaccuracy. That means that any disclosure made after HMRC announce an intention to undertake an inspection will be prompted. The result would be minimum penalties of 15% for a careless inaccuracy, 35% for a deliberate inaccuracy with no concealment, and 50% for a deliberate inaccuracy with concealment. Remember – those are minimum penalties, achievable only where there is perfect disclosure and cooperation in relation to the default. Given human nature, the likely analysis is that the real penalty will be higher. Thus for a careless inaccuracy the best taxpayers can hope for is 15%, and in practice it is likely to be 20% or more. For ‘ordinary’ tax investigations that are the cannon-fodder of everyday
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enquiry work for HMRC – the corner newsagent or general store, the taxi driver, the garage owner, the subby – 35% is the lowest possible penalty and the reality is likely to be 40% or more of the potential lost revenue. If an adviser is given the opportunity to preview what HMRC will be likely to see during the investigation then the chance of identifying potential problems – and thus saving money on penalties – will be optimised. So – get your tax adviser involved now to review records to identify potential weaknesses and disclosures. And when HMRC announce that a compliance check is coming don’t delay – get your tax adviser involved immediately to help you hang on to as much of your money as you can! Andrew Gotch BA MA CTA (Fellow) is a tax adviser for John Cumming Ross Limited and can be contacted on 020 864 6689 or post@jcp.uk.com.
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Tel:+44 [O] 1625 548 100 / Fax:+44 [O] 1625 548 200 Email: westfieldtexuk@aol.com
6-b Hawthorn Lane, Wilmslow, Cheshire SK9 1AA, England, U.K.
Asian Voice & Gujarat Samachar - 2009
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