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18 April 2007
Categories: News
New penalties legislation; Delayed SA returns; Form 42 online; RPI March; Negligible values

Power of thought

New penalties legislation has been included in the 2007 draft Finance Bill at Sch 24 which makes a penalty payable if HMRC think that a taxpayer has done, or not done, something. This is a significant shift from the taxpayer actually doing or omitting to do something, according to The Chartered Institute of Taxation, although the phrase was used in the draft legislation published back on 19 December 2006. John Cullinane, CIOT president says that the test for penalties should 'always be objective rather than subjective'. He says that 'either there has been an offence giving rise to a penalty or there has not. The penalty follows from what the taxpayer did and from nothing else. These words [HMRC think] are not needed'. When the words were first suggested by HMRC, the various professional bodies objected and, according to the CIOT, on Budget day HMRC admitted that there was almost universal disquiet about the statutory formula 'if HMRC think'. However, despite objections to this subjective clause it has, at Bill stage at least, remained in the draft legislation.
What most taxpayers want is certainty about their tax position, says Francesca Lagerberg of Grant Thornton. Whereas, 'legislation based on what the tax authority “thinks” brings us into a realm of subjectivity that is going in the wrong direction'. HMRC has said that ordinary phrases are part of the new tax law rewrite style for legislation but, she says that 'that project is about making the tax law easier to understand rather than potentially taking us on the slippery slope to yet more tax cases as people have to resort to the courts to clarify what the law really means'.


Delayed returns

HMRC say that 'due to production issues' (unspecified), there will be a delay of up to nearly four weeks in sending some taxpayers their annual self assessment tax returns this year. HMRC anticipate that 90% of taxpayers scheduled to receive the main self assessment return (SA100) will have this by 19 April, with the remainder being received by 24 April 2007.
80% of taxpayers scheduled to receive the self assessment short return (SA200) will have this by the end of April, with the remainder being received by 8 May 2007.
HMRC apologise for any inconvenience this may cause, but have not offered to extend the deadline for submission of the returns by the equivalent time.
As a point of interest, in these days of online filing when online filers do not receive a paper form to complete in April, HMRC issues roughly 3.5 million main tax returns and around 1.5 million short returns. In the early days of self assessment, some ten million returns were issued.
www.hmrc.gov.uk

Form 42 online

Companies file employee share scheme returns online from 6 April 2007. The employee share schemes online filing facility enables companies to report information about their share incentive plan (form 39), save as you earn (from 34), company share option plan (form 35) events relating to employment-related securities (form 42) to HMRC electronically. Companies continue to have the option, however, of sending these forms in on paper if they prefer.
Welcoming this development, Fiona Downes of ifs ProShare says that is a 'very positive step' which is likely to save companies and share scheme administrators 'both time and money'.
www.hmrc.gov.uk/shareschemes/returns-and-info.htm; HMRC news release dated 6 April 2007


Retail prices index

The all items retail prices index for March 2007 is 204.4.

Negligible values


HMRC have accepted the following securities as having negligible value during March 2007 for the purposes of a claim under TCGA 1992, s 24(2).

Company

Security

Effective date

The Quarterly High Income Trust plc

zero dividend prefs

6.10.05

 

Where the value of shares has become negligible, an allowable loss may be established by the owner claiming that they are treated as being sold and reacquired, either on the date of the claim or at a specified time within the two tax years prior to the date of claim.
See www.hmrc.gov.uk/cgt/negvalist.htm for the full list of negligible value securities.

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