Tax Wrongdoing Pamphlet Issued

January 26, 2010 Taxation in UK

100 Parliament StreetThe UK’s HM Revenue & Customs (HMRC) has published a pamphlet outlining new penalties for abuse of the Value Added Tax (VAT) and Excise system.

On January 25th the HMRC made available a pamphlet outlining their new VAT and Excise Wrongdoing penalty system, which will be enacted on April 1st, 2010. The offenses listed within the pamphlet are: the issuance of an invoice with VAT which the issuer was not entitled to charge, handling of goods on which Excise Duty has not been deferred or paid, using a product in a way which would mean that higher Excise Duties should have been paid on it, or providing products with a lower rate of Excise Duty than its use would entail.

The penalties are charged as a percentage of potential revenue lost by the HMRC, with the rate varying upon circumstance of discovery and the intentions of the offender. Wrongdoings that are covered by a “reasonable excuse” will not be charged a penalty. Penalties on non-deliberate wrongdoings reach a maximum of 30 percent and a minimum of 10. Deliberate wrongdoings reach 70 percent and begin at 20. The most sever punishments are laid upon those committing and concealing deliberate wrongdoings, whereupon penalties will reach 100 percent, and begin at 30. Leniency in penalties can be provided if the offender makes a full voluntary disclosure before any HMRC investigations are initiated. Further, parties involved in or knowledgeable of the wrongdoing, like agents, employees or advisers are also liable for penalties, unless it is shown that they took all reasonable steps to avoid involvement.

Photo by Sonti Malonti