Budget March 2011: Other measures announced in the Budget
Wednesday 23rd March 2011
New data-gathering powers for HMRC
The Finance Bill 2011 will include measures to ‘modernise’ HMRC’s information powers by introducing a single set of general rules.
Notably, HMRC will be able to specify the format in which data is to be provided so that it may be more easily processed. The Government claims that the latest reforms will:
- allow HMRC to use bulk information powers to gather specific pieces of information about a group of taxpayers, for use in risk analysis
- introduce specialist ‘unnamed taxpayer’ powers that are narrowly defined in law to be used in very specific circumstances during a compliance check, such as when it is not clear who the taxpayer is
- allow HMRC to apply to the tribunal for increased daily penalties where data is not supplied
- cover data about certain foreign taxes
- provide a penalty if a person is aware of an inaccuracy when providing information or documents and to correct a minor error in the legislation.
These changes are expected to be introduced from 6 April 2012 and will lead to a significant increase in HMRC’s powers.
Security for PAYE & NICs
Legislation in Finance Bill 2011 will introduce a power to allow HMRC to make regulations enabling them to require a security from employers for PAYE that is seriously at risk. The measure will also introduce a criminal offence for non-payment of a security.
Once the new power is in place, HMRC will use existing powers to make equivalent provision in respect of NICs.
Disguised remuneration
New measures will ensure that income tax and NICs on employment income are not avoided or deferred through the use of trusts or other intermediaries, including Employee Benefit Trusts (EBTs) and Employer Financed Retirement Benefit Schemes (EFRBS).
The legislation will have effect on or after 6 April 2011 and applies to rewards which are earmarked for an individual employee or otherwise made available on or after that date.
In addition, anti-forestalling provisions apply to the payment of sums (including loans) and the provision of readily convertible assets for the purposes of securing the payment of sums (including loans) where the sum is paid or the asset is provided between 9 December 2010 and 5 April 2011 where, if paid or provided on or after 6 April 2011, they would be caught by the legislation.
Mutual Assistance Recovery Directive (MARD)
Legislation will be introduced in Finance Bill 2011 to enable the UK to implement the MARD agreed by EU Finance Ministers during 2010. Under this Directive EU Member States can provide each other with assistance in the recovery of tax debts and duties, which includes service of documents and exchanging information in connection with the recovery of claims.
This measure fulfils the UK’s EU obligations by implementing the directive which provides reciprocal arrangements for recovering and enforcing tax debts and for the exchange of information across the EU.
The Directive becomes fully applicable on 1 January 2012 and the UK legislation transposing the Directive and setting out the detailed rules will come into force on that date.
Online tax calculator
The Government will build an online personal tax calculator by 2012 to allow individuals to estimate how much income tax and NICs they pay.
Move from RPI to CPI
From April 2012 the default indexation assumption for all direct taxes including income tax, NICs, inheritance tax, capital gains tax and ISAs, will move from the Retail Price Index (RPI) to the Consumer Price Index (CPI).