The prospect of a significantly
tougher penalty regime provides a strong incentive to taxpayers to clean up their act and make a last chance voluntary disclosure.
HMRC say that the current
VAT penalty regime (which identifies careless or deliberate errors) requires HMRC to specify whether they are alleging one or the other of actual and constructive knowledge for the purposes of the penalty, whereas they do not need to make this distinction for the legal test in respect of the tax itself.
Campaigners for those on low incomes have commended HMRC for opening up the debate about the
tax penalty regime.
In the result, Mr Westphal - Larsen was caught by a regulatory catch - 22 enforced by one the most draconian administrative
monetary penalty regimes in Canadian law.
The Association of Taxation Technicians (ATT) has called for taxpayers to be given a «last chance» to declare offshore income and gains before the introduction of a tough
new penalty regime.
In addition to the new
civil penalty regime, the maximum penalty for criminal sentences for sanctions violations has been increased from 3 to 12 months on summary conviction, and from 2 to 7 years on indictment.
The third consultation document proposed tougher sanctions for those involved in the hidden economy, including higher penalties for those who repeatedly fail to notify chargeability, additional tracking and enhanced monitoring of taxpayers with a history of non-compliance, and strengthening
the penalty regime where an immigration offence is also committed.
Pressed on
the penalty regime and the gradual taking away of benefits from the most recalcitrant, Mr Duncan Smith first offers lengthy and detailed explanations about why almost all people will get back into work if they can.
In the very same paragraph, he mentions
the penalty regime «already in force» for those who enable offshore tax evasion.
Changes to
the penalty regime should allow HMRC to continue to reduce the tax gap so are welcomed with «cautious optimism» although the detail will be important in understanding how far these powers extend.
The EU also has a major update to its data protection framework incoming, the GDPR, which will apply from May 25 — and which ramps up the liabilities for companies ignoring data protection rules by bringing in a new
penalty regime that scales as high as 4 % of a organizations global turnover (for Facebook that could mean fines as large as $ 1.6 BN, based on the ~ $ 40.6 BN it earned last year — per its 2017 full year results).