HMRC launches new guidelines on notifying them of a tax liability
Published March 2010
Most people understand that if you don't complete your tax return, or pay your tax on time you will be penalised by the tax authorities. What is less commonly understood is that you can also be handed a penalty for failing to tell HMRC about a new source of income. To try and cross this void of public understanding they have this week issued concise guidance on what you need to tell them and when, as well as outlining the penalties for failing to comply. Let me suffice to say that there is no defence in saying that HMRC did not send you a tax return, so you did not think you needed to tell them anything.
The guidance offered covers all areas of tax, but give particular prominence to VAT and the self-employed. In the case of VAT this would mean not telling HMRC within 30 days of your turnover exceeding the threshold, which is currently £68,000. For the self-employed if you began to trade after 6th April 2009, you should have already notified HMRC by the 31st January 2010.
As the nature of the non-compliance with HMRC's deadlines can greatly affect the penalties charged, I would urge all clients to look closely at their affairs and to contact their tax adviser if they are unsure. For example, under the new penalties regime an unprompted disclosure to HMRC (where the mistake is deemed to not be deliberate) attracts no penalty. However, if HMRC elicit the disclosure a maximum penalty of 30% can be levied even if the mistake is again not deliberate. The maximum penalty would be where the non-disclosure was deliberate and hidden, in which case a penalty of 100% and even criminal proceedings could be imposed.
Internet link: http://www.hmrc.gov.uk/about/new-penalties/failure-to-notify.pdf
