Below is a blog written by my colleague Barry Hallam who contributes to our sister blog Tax Plus blog...

HM Revenue & Customs (HMRC) have warned of a number e-mail scams inviting people to provide credit card details in order that a tax refund can be sent to them. The latest example includes an official looking form requesting full details of a credit card with the instruction that it must be returned within 2 days or the tax refund will be declined!

It even covers the situation where you do not have a credit card by inviting you to provide details of a nominee.

As HMRC say on their website:

HMRC would not inform customers of a tax rebate via email, or invite them to complete an online form to receive a rebate of tax.

Do not visit the website contained within the email or disclose any personal or payment information.

Email addresses used to distribute the tax rebate emails include:

service@hmrc.gsi.gov.uk
claims@hmrc.direct.gov.uk
notice@hmrc.gov.uk
hmrc@hmrc.gov.uk
admin@hmrc.gsi.gov.uk
info@hmrc.gsi.gov.uk
no-reply@hmrc.gsi.gov.uk

HM Revenue & Customs (HMRC) does not send out emails using these email addresses.

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The basic rate tax cut would reduce pension value.

The change in the income tax basic rate from 22% to 20% means that a saver investing a typical £200 a month now needs to pay an extra £48 a year to end up with the same value in the pension fund.

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HMRC has published new guidance on the new penalty provisions that will apply from April 2008.

HMRC states that it has designed the new penalties so that:

• If people take reasonable care when completing their returns they will not be penalised.
• If they do not take reasonable care errors will be penalised, and the penalties will be higher if the error is deliberate.
• Disclosing errors before HMRC find them will substantially reduce any penalty due.

The new penalties initially apply to VAT, PAYE, National Insurance, Capital Gains Tax, Income Tax, Corporation Tax and the Construction Industry Scheme.

Further information can be found at:
http://www.hmrc.gov.uk/about/new-penalties/penalties-leaflet.pdf
http://www.hmrc.gov.uk/about/new-penalties/faqs.htm  

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... is expected to take effect for periods starting after 31 March 2008 where the return is filed after 31 March 2009.

The new system distinguishes between different types of tax “offence” for example, heavy penalties for evasion, but an acknowledgement that genuine errors happen.

HMRC appears to want to encourage compliance and sees penalties as an essential element in enforcement.

The result is that the new penalties will apply to returns for income tax, corporation tax, pay as you earn, national insurance contributions and VAT.

The new regime seeks to grade the penalty to match the ‘offence’. There are effectively four categories:

• Innocent mistake; 
• Careless conduct; 
• Deliberate action, but not concealed; and 
• Deliberate action with concealment.
  

Innocent mistakes will no longer attract a penalty. The penalties for the other three conducts are laid down with prescribed reductions for disclosure (differentiating between prompted and unprompted). The proposed penalties range from 15% to 30%, for a prompted disclosure for ‘failure to take reasonable care’, to 100% of the tax due for a ‘deliberate understatement with concealment’.

It will be “interesting” to see how HMRC will distinguish between innocent mistakes and a ‘failure to take reasonable care’. This is likely to be an area for debate, dispute and potential litigation.
You should be aware that unprompted disclosures will reduce penalties to nil for potentially minor offences.

Additionally, in cases of ‘failure to take reasonable care’, HMRC has the discretion to apply a suspended penalty. If the correct procedure is implemented and adhered to, the penalty could be cancelled.

One thing that is clear is that a lot of businesses and individuals will be affected.

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