Helping clients who are the subject of a HMRC compliance check or want to make a disclosure to HMRC. I tend to be involved in a wide range of tax matters, and many involve HMRC’s perennial campaigns, such as offshore matters and anything connected to land and property.
If you could make one change to a tax law or practice, what would it be?
I would change the failure to correct (FTC) penalties regime, which was introduced by F(No. 2)A 2017 Sch 16, so that it only applies to deliberate behaviour.
The legislation introduced an obligation for any person to notify HMRC on or before 30 September 2018, that they had undeclared UK tax liabilities for tax years up to 5 April 2016 and related to income tax, capital gains tax or inheritance tax that involve an offshore matter or transfer. Failure to do so, means HMRC can potentially charge penalties of up to 200% of the additional tax regardless of the cause for the error/failure.
I believe this legislation is unduly harsh. Take for example, an individual who carelessly failed to include non-UK dividends in their personal tax return, that individual would potentially be liable to FTC penalties of up to 200%. Now contrast this with a company whose corporation profits were deliberately understated by its directors, who diverted the amounts into an offshore bank account. Even though this is a deliberate behaviour, the maximum penalty is limited to 100%. This is because the omitted profits are liable to corporation tax which is not subject to the FTC penalties, so how fair is that!
Unfortunately, the FTC penalties are here to stay for many years to come due to the assessing time limits for failing to notify chargeability to tax and FA 2019, which extended the time limit for HMRC to make an assessment by 12 years, where the errors related to offshore matters and transfers and were due to reasonable excuse or carelessness. Potentially, HMRC could go back to the tax year 5 April 2016 for reasonable excuse and 5 April 2014 for carelessness – which hardly seems fair!
What do you know now that you wish you’d known at the start of your career?
The importance of learning from your more experienced colleagues, as they may be able to advise as to how best to deal with a particular tax matter. Just listening to conversations between your experienced colleagues can help develop your knowledge and expertise. I do wonder, though, whether this form of passive learning is diminishing as we progress to more agile working (in particular, remote working), but only time will tell.
Are there any new rules that are causing a particular problem in practice?
For me, it is HMRC’s recent consultation on amending and expanding the considerable information and inspection powers at their disposal. It feels as if HMRC would like to make it much easier for its officers to obtain information, rather than addressing the failure of its officers to comply with the existing legislation (such as vague and poorly constructed notices and inappropriate use of information powers) and the Human Rights Act.
Has a recent tax case caught your eye?
There have been occasions where prospective clients fail to understand the importance of not misleading or making an incomplete disclosure to HMRC. This can be where they only want to make a disclosure in response to a nudge letter as the person believes that’s all they need to disclose. Bernie Ecclestone’s admission of pleading guilty to tax fraud by false misrepresentation is a timely reminder of what can happen if a person fails to make a full and complete disclosure. Whilst he was the subject of a Code of Practice 9 enquiry, the principle remains the same for all types of enquiries and disclosures.
You might not know this about me but...
I love reading sci-fi and fantasy, in particular the books written by Raymond E Fiest and the late Robert Jordan. I am also into online games, a habit which started from playing games on a Sinclair Spectrum ZX81, which shows how old I am!
Helping clients who are the subject of a HMRC compliance check or want to make a disclosure to HMRC. I tend to be involved in a wide range of tax matters, and many involve HMRC’s perennial campaigns, such as offshore matters and anything connected to land and property.
If you could make one change to a tax law or practice, what would it be?
I would change the failure to correct (FTC) penalties regime, which was introduced by F(No. 2)A 2017 Sch 16, so that it only applies to deliberate behaviour.
The legislation introduced an obligation for any person to notify HMRC on or before 30 September 2018, that they had undeclared UK tax liabilities for tax years up to 5 April 2016 and related to income tax, capital gains tax or inheritance tax that involve an offshore matter or transfer. Failure to do so, means HMRC can potentially charge penalties of up to 200% of the additional tax regardless of the cause for the error/failure.
I believe this legislation is unduly harsh. Take for example, an individual who carelessly failed to include non-UK dividends in their personal tax return, that individual would potentially be liable to FTC penalties of up to 200%. Now contrast this with a company whose corporation profits were deliberately understated by its directors, who diverted the amounts into an offshore bank account. Even though this is a deliberate behaviour, the maximum penalty is limited to 100%. This is because the omitted profits are liable to corporation tax which is not subject to the FTC penalties, so how fair is that!
Unfortunately, the FTC penalties are here to stay for many years to come due to the assessing time limits for failing to notify chargeability to tax and FA 2019, which extended the time limit for HMRC to make an assessment by 12 years, where the errors related to offshore matters and transfers and were due to reasonable excuse or carelessness. Potentially, HMRC could go back to the tax year 5 April 2016 for reasonable excuse and 5 April 2014 for carelessness – which hardly seems fair!
What do you know now that you wish you’d known at the start of your career?
The importance of learning from your more experienced colleagues, as they may be able to advise as to how best to deal with a particular tax matter. Just listening to conversations between your experienced colleagues can help develop your knowledge and expertise. I do wonder, though, whether this form of passive learning is diminishing as we progress to more agile working (in particular, remote working), but only time will tell.
Are there any new rules that are causing a particular problem in practice?
For me, it is HMRC’s recent consultation on amending and expanding the considerable information and inspection powers at their disposal. It feels as if HMRC would like to make it much easier for its officers to obtain information, rather than addressing the failure of its officers to comply with the existing legislation (such as vague and poorly constructed notices and inappropriate use of information powers) and the Human Rights Act.
Has a recent tax case caught your eye?
There have been occasions where prospective clients fail to understand the importance of not misleading or making an incomplete disclosure to HMRC. This can be where they only want to make a disclosure in response to a nudge letter as the person believes that’s all they need to disclose. Bernie Ecclestone’s admission of pleading guilty to tax fraud by false misrepresentation is a timely reminder of what can happen if a person fails to make a full and complete disclosure. Whilst he was the subject of a Code of Practice 9 enquiry, the principle remains the same for all types of enquiries and disclosures.
You might not know this about me but...
I love reading sci-fi and fantasy, in particular the books written by Raymond E Fiest and the late Robert Jordan. I am also into online games, a habit which started from playing games on a Sinclair Spectrum ZX81, which shows how old I am!
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