The Criminal Finances Act 2017 took effect on 30 September 2017. It makes companies and partnerships, a ‘relevant body’, criminally liable if they fail to prevent the facilitation of tax evasion being carried out by an employee, anyone acting on their behalf or someone acting as an agent. If found guilty, the business could face unlimited fines and potentially further consequential sanctions within their industry or profession.
This Act has the effect of creating an offence at corporate and partnership level which does not require the directors/partners to have had any knowledge of the offence in question. Broadly, the offence is the failure to prevent the crimes of those who act for or on behalf of the corporate body or partnership instead of the need to attribute criminal acts to that body.
For a firm to be criminally liable under the new Act, there are three elements of the offence:
- There must be the execution of a criminal act of tax evasion.
- The crime must have been facilitated or carried out by a person associated with a relevant body.
- The relevant body failed to initiate adequate prevention procedures in relation to the act carried out by the associated person.
A defence is available when it can be shown that ‘reasonable prevention procedures’ were in place to prevent the associated person from committing or facilitating the crime; or that it would have been unreasonable or disproportionate to expect such procedures to be in place.
The government advises that any reasonable prevention procedures should be based on six guiding principles:
- Risk assessment – the relevant body should assess the nature and extent of its exposure to the risk of an associated person committing a criminal act;
- Proportionality – the procedures should take into account the nature, scale and complexity of the relevant body’s activities;
- Top level commitment – the management of the relevant body should be committed to preventing illegal acts and should foster a culture that tax evasion and its facilitation is never acceptable;
- Due Diligence – with appropriate procedures put in place with respect to all people who perform services for the relevant body;
- Communication – training staff and ensuring the message effectively gets across to all employees and agents;
- Monitoring and reviewing – ensuring that whatever procedures are put into place are regularly reviewed and updated and amended where necessary.
Please contact us if you require further information on this issue.
Internet link: GOV.UK Tackling tax evasion corporate-offence
The Welsh Assembly has announced the proposed rates and bands for land transaction tax (LTT) which is to be introduced for land and property in Wales on 1 April 2018, replacing Stamp Duty Land Tax.
Under the new rates for LTT, Wales will have the highest starting threshold for the property tax in the UK. The proposed rates are as follows:
|0 – 150,000
|150,001 – 250,000
|250,001 – 400,000
|400,001 – 750,000
|750,001 – 1.5m
|1.5m – plus
|0 – 150,000
|150,001 – 250,000
|250,001 – 1m
Announcing the rates and bands, Professor Mark Drakeford, Cabinet Secretary for Finance and Local Government, said:
‘From April, Wales will introduce the first Welsh taxes in almost 800 years, supporting first-time buyers and boosting business.
The devolution of tax powers provides us with the opportunity to reshape and make changes to improve existing taxes to better meet Wales’ needs and priorities. I have always been clear that we will use these powers to help improve fairness and support jobs and economic growth in Wales.
These new progressive rates and bands for land transaction tax and landfill disposals tax will make a real difference to people’s lives; help change behaviours and deliver improvements to communities across Wales. We are being bold but balanced and leading the way in creating a fair and progressive tax system.’
Internet link: GOV.UK Wales
On 14 December, the Scottish Budget will set out the Scottish Government’s financial and tax plans.
Currently taxpayers who are resident in Scotland pay income tax on their non-savings and non-dividend income at rates and thresholds determined by the Scottish Government. Scottish higher and additional rate taxpayers may pay more income tax than those with similar income in the rest of the UK. The Scottish Parliament is considering plans to radically revise the bands and possibly to introduce some further income tax rates so that middle and higher earners pay additional tax.
The Scottish Parliament are also expected to announce the details of Air Departure Tax which takes effect for flights from Scotland from April 2018.
We will keep you up to date with pertinent announcements.
Internet links: BBC news
HMRC have changed the way in which they will assess some taxpayers removing the need for these individuals to complete a Self Assessment Tax Return. These changes took effect from September 2017.
The affected taxpayers fall into one of two categories:
- new state pensioners with income more than the personal tax allowance (£11,000) in 2016/17; and
- employees or pensioners with PAYE tax codes who have underpaid tax and who cannot have that tax collected through their tax code because it is too high to code out.
HMRC have also confirmed that all existing state pensioners who complete a tax return because their state pension is more than their personal allowance will be removed from self assessment in 2017/18. This may mean that some clients are dropped out of self assessment and issued an assessment instead based on the information which HMRC hold. Of course, whether the assessment is actually correct will be a different matter.
‘HMRC will write to customers from September 2017 with a tax calculation. This could be a P800 or a Simple Assessment letter (PA302).
The letter will show their:
- income from pay
- state benefits
- savings interest
- employee benefits.
Customers just need to check the information is correct, and if it is they can pay their bill online or by cheque by the deadline in the letter.
If a customer thinks any information is incorrect they have 60 days to contact HMRC. For instance, if they think amounts used are wrong or HMRC didn’t act on information received.
Should customers miss the deadline they should contact HMRC to discuss their circumstances or financial penalties will be applied in line with current policy.
If customers are not happy with the follow-up response from HMRC, they have 30 days to appeal against the decision.’
If you would like help with your personal tax affairs please get in touch.
Internet links: GOV.UK briefing policy paper
With the Chancellor’s first Autumn Budget due to be presented on 22 November, professional bodies and business groups are setting out their Budget wishlists. Recommendations include changes to Business Rates, a ‘Brexit ready’ Budget, incentives for business and an appeal for changes to the Apprenticeship Levy. The ICAEW is urging that the government give sufficient attention to Making Tax Digital to ensure a successful roll out and making the necessary changes to accommodate Brexit.
Meanwhile, the Federation of Small Businesses (FSB) has urged Philip Hammond to deliver a ‘Brexit-ready’ Budget, which rules out any new business tax increases and maintains investment incentives.
We will update you on pertinent announcements.
Internet links: CBI FSB ICAEW autumn budget