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Other measures announced

Tax payments

At some point on or after April 2011 HM Revenue & Customs will introduce voluntary managed payment plans (MPPs) which will allow taxpayers to spread their income tax or corporation tax payments equally over a period straddling the normal due dates.

It is also proposed to introduce arrangements whereby small tax debts may be collected through the PAYE system, but the arrangements required to facilitate this are unlikely to be in place until April 2012.

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Substantial charitable donors

The threshold of a substantial donor increases on or after 23 April 2009. A substantial donor is now defined as a donor, individual or company, who gives £150,000 (previously £100,000) or more in a six year period. The annual threshold of £25,000 remains.

The substantial donor rules address those who influence or establish charities with a view to avoiding tax rather than those with any charitable intent. This change increases the threshold of relievable gifts which a person may make before becoming a substantial donor. If a charity enters into a specified transaction with a substantial donor or someone connected the transaction will be treated as non-charitable expenditure which is subject to a tax charge.

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Landfill tax

The standard rate of landfill tax increases from £40 per tonne to £48 per tonne in respect of the disposal of waste made, or treated as made, on or after 1 April 2010.

The Finance Bill 2009 will:

  • Provide that secondary legislation may prescribe activities that are to be treated as taxable disposals
  • Provide that secondary legislation may be made to require the supply to HM Revenue & Customs of information about material at a landfill site and site restoration
  • Provide that the tax return form can be prescribed in a public notice
  • Update certain references in landfill tax legislation
  • Remove sections 43C and 62 of FA 1996.

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Climate change levy

A measure that affects those who manufacture certain plastic products is proposed whereby a restricted entitlement to claim relief from climate change levy is being introduced in respect of the supplies of electricity and liquefied petroleum gas only. This measure applies on or after the date the Finance Bill receives Royal Assent and is introduced to ensure compliance with state aid rules.

Measures will be introduced to enable HM Revenue & Customs to recover climate change levy where a facility that claims relief fails to meet its target(s), and is in a sector that fails to meet its sector level target(s) for the same period. Recovery, when applied, would be proportionate to the extent to which the facility had failed to meet its target(s). This measure applies to climate change agreement certification periods starting on or after 1 April 2009.

Supplies of low value solid fuel valued at no more than £15 per tonne are now liable to climate change levy. This measure comes into force on or after 1 January 2010.

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Penalties

It is proposed that starting from April 2010 and over a period of time the penalty regime will be revised in respect of those taxpayers who do not file their returns or pay their tax liabilities on time. The regime applies to income tax, corporation tax (CT), pay as you earn (PAYE), national insurance contributions (NICs), construction industry scheme (CIS), stamp duty land tax, stamp duty reserve tax, inheritance tax (IHT), pension schemes and petroleum tax.

Penalties for late filing of annual or occasional returns (e.g self assessment, CT, IHT) include:

  • £100 penalty immediately after the due date for filing
  • Daily penalties of £10 a day for returns that are more than three months late, running for a maximum of 90 days
  • Penalties of 5% of tax due for the return period for prolonged failures (over six months and again at 12 months)
  • Higher penalties of 70% of the tax due where a person fails to submit a return for over 12 months and has deliberately withheld information necessary for HM Revenue & Customs to assess the tax due (100% if deliberate concealment).

Late payment penalty proposals include:

  • Penalties of 5% of the amount of unpaid tax, generally one month after the payment due date
  • Further penalties of 5% of any amounts of tax still unpaid at 6 months and 12 months
  • Suspension of late penalties where the taxpayer agrees a time to pay arrangement.

Penalties for late filing of CIS returns include:

  • A fixed penalty of £100 for failure to submit any return by the filing date
  • An additional fixed penalty of £200 if any return is outstanding more than 3 months after the filing date
  • Penalties of 5% of deductions due for the return period for prolonged failures (over 6 months and again at 12 months)
  • Higher penalties of 70% of the deductions due where a person fails to submit a return for over 12 months and has deliberately withheld information.

Penalties for late payment of taxes and deductions collected through the PAYE system

  • The amount of the penalty will depend on the number of defaults in any 12 month period.
  • The first time the taxpayer defaults they will not receive a penalty
  • A second late payment and any subsequent failures in the default period will attract a penalty of 2% of the tax unpaid rising to 5 per cent
  • Further penalties of 5% of any amounts of tax still unpaid at 6 months and 12 months
  • Late payment penalties will not be charged during an agreed time to pay arrangement with HM Revenue & Customs unless the taxpayer defaults or misuses the arrangement.

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North sea oil taxation - anti avoidance

Changes will be made to the ring fence corporation tax (RFCT), petroleum revenue tax (PRT) and chargeable gains tax (CGT) rules in respect of expenditure incurred on or after 22 April 2009 (RFCT) and in relation to chargeable periods beginning after 30 June 2009 (PRT) and disposals made on or after 22 April 2009 (CGT). Further details may be found in BN09 issued 22 April 2009.

The Budget introduced a new 'Field Allowance' which applies to oil and gas fields given development consent on or after 22 April 2009. Further details may be found in BN 10 issued 22 April 2009.

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Financial services compensation scheme (FSCS)

Compensation paid by FSCS to the customers of defaulting institutions has included an amount representing accrued interest. Income tax payers will be charged income tax on the amount of the accrued interest paid by the scheme. This applies to payments made by the FSCS on or after 6 October 2008.

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Lloyd's corporates: UK dividend exemption

Both UK and foreign dividends and other distributions received by Lloyd's corporate members on or after 1 July 2009 corporate members will become exempt from corporation tax.

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Deliberate tax defaulters

Names and details of individuals, businesses and companies who are penalised for deliberate defaults leading to a loss of tax of more than £25,000 will have their names published. Details will be published quarterly on HM Revenue & Customs website within one year of the penalty becoming final and will remain published for one yearbe removed from the website after 12 months. This will not apply where a full unprompted disclosure is made or a full prompted disclosure is made within the required time. This applies to penalties in respect of income tax, corporation tax and in respect of certain VAT and excise wrongdoings.

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Further announcements:

  • Life insurance companies: consultation outcomes and simplification (BN14)
  • Transfers of business between mutual societies (affects mutual societies only) (BN20)
  • Save as you earn simplification for scheme providers (affects SAYE providers)
  • (BN30)
  • North sea: accelerated decommissioning relief (affects North sea oil and gas companies) (BN34)
  • Double taxation relief avoidance: banks using manufactured overseas dividends (affects banks and others) (BN59)
  • Double taxation relief: credit abuse (affects banks) (BN60)

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