Tax administration and compliance

Making Tax Digital

The mandatory application of Making Tax Digital for unincorporated businesses and landlords with turnover below the VAT threshold (£85,000 from April 2017) will be deferred for one year, to April 2019.

Promoters of tax avoidance schemes (POTAS)

Legislation will ensure that promoters of tax avoidance schemes cannot circumvent the POTAS regime by reorganising their business by sharing the control of a promoting business, or putting someone between themselves and the promoting business.

Strengthening tax avoidance sanctions and deterrents

A new penalty will be introduced for someone who has enabled another person or business to use a tax avoidance arrangement that is later defeated by HMRC, as previously announced. The defence of having relied on non-independent advice as taking ‘reasonable care’ when considering penalties, will be removed.

Offshore evasion – requirement to correct

As previously announced, a new legal ‘requirement to correct’ will be introduced for those who have failed to declare UK tax on offshore interests, with tougher sanctions for those who fail to do so before 1 October 2018. This is expected to come into force from the date of Royal Assent and will apply to all taxpayers with offshore interests who have not complied with their UK tax obligations as at 5 April 2017.

Image rights

HMRC will publish guidelines for employers who make payments for image rights to their employees. The aim is to improve the clarity of the existing rules.

Employment allowance

HMRC is actively monitoring compliance with the national insurance employment allowance following reports of some businesses using schemes to avoid paying the correct amount of NICs. The government will consider taking further action if this avoidance continues.

Tax credit debt

The Department for Work and Pensions (DWP) will recover an amount of HMRC tax credit debt, using its existing powers including Direct Earnings Attachment, as previously announced.

Benefit fraud and error

As previously announced, the DWP will work with an external data provider to identify more effectively fraud and error caused by undeclared partners.