Money Talk By Ronnie Ludwig Saffery Champness accountants

Ronnie Ludwig, Saffery Champness

They involve HM Revenue & Customs' investigatory and inspection powers, closing loopholes in the tax laws for non-domiciled individuals and, interestingly, the introduction of a credit card payment service for tax liabilities.

Legislation will be introduced in the finance bill to give the Revenue new inspection and information powers.

It is designed to create a level playing field across all the different taxes and will give the Revenue a new power of inspection.

Up until now, for VAT and PAYE matters, the Revenue had inspection powers with no rights of appeal.

But this was not the case for other taxes.

Previously the Revenue had to open a formal tax enquiry before asking you for additional information.

This has all changed and a lot of the red tape surrounding their ability to do this has gone.

It will enable the Revenue to require taxpayers to provide supplementary information in relation to any documents which they consider relevant to establishing the correct tax position.

Third parties

The new powers will also give tax inspectors the right to require third parties to provide information, rather than simply the taxpayer himself.

The Revenue will now be able to directly penalise those who assist tax evaders by providing false or misleading information

The new powers contain an extension whereby if the Revenue can establish that a tax return is incorrect because a third party has either withheld, or provided false information to the tax payer, that third party will be directly charged a penalty by the Revenue.

Prior to charging a penalty the Revenue will be required to establish that the third party had an intention to cause tax to be underpaid.

This could lead to some very interesting debates, and probably litigation in future.

What is clear is that the Revenue will now be able to directly penalise those who assist tax evaders by providing false or misleading information.

Work or home?

A further new power will be introduced whereby the Revenue can visit business premises and inspect records, assets and indeed the premises themselves.

This will present an interesting scenario where taxpayers have claimed for the use of a room at home as an office.

It would appear that under the new legislation the Revenue will have an absolute right to visit the private home on the grounds that at least part of it constitutes "business premises"!

Non-doms

The attack on non-domiciled individuals continues unabated.

This loophole will now be closed by new laws

Until now there have been no statutory rules setting out the treatment of remittances of offshore funds which contain a combination of income, gains and capital.

This permitted the income and gains of a non-dom to be remitted through the use of offshore vehicles, such as bank accounts, in conjunction with a close relative.

Until now a non-dom could accumulate income and gains in an offshore bank account in his or her own name.

They could then arrange to transfer those funds to a spouse or other close relative by gifting the funds into a separate offshore bank account in that individual's name.

By doing so the person receiving the money could then import the funds without attracting a charge to tax.

This loophole will now be closed by new laws.

This will ensure that where the donor or their immediate family benefit in any way, the non-dom donor will be taxed on the funds as if they had brought the money in themselves.

Credit cards

In a society which is seeing record levels of debt, it is interesting that the Chancellor announced new legislation which will enable HMRC to introduce a credit card payment "service".

In effect what the Chancellor has said is that if an individual cannot afford to pay their tax any other way, the Revenue will be happy to collect the outstanding liability by credit card payment.

This step seems rather disingenuous.

Apart from adding to the woes of those already in debt, many people will have noticed that the "official rate" of interest charged by the Revenue on unpaid tax is currently around 7.5% for the first thirty days with a surcharge of a further 5% thereafter.

That compares to credit card interest rates of anywhere up to 30%.

It has to be assumed that most people in dire financial straights will go for the cheaper option.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.