Tax avoidance and evasion

Self-employment income support scheme (SEISS)

A 100% tax charge can be levied on individuals who receive SEISS payments to which they are not entitled. The provisions are being extended to enable HMRC to recover payments where an individual was entitled to the grant at the time of claim but subsequently ceases to be entitled to all or part of the grant.

Late submission and late payment of tax

The penalty regime for VAT and income tax self-assessment (ITSA) will be made points-based, so that a financial penalty will only be issued when the relevant threshold is reached. The new late payment regime will introduce penalties proportionate to the amount of tax owed and how late the tax due is. Interest charges and repayment interest on VAT will be aligned with other tax regimes. These reforms will come into effect for:

  • VAT payers – from periods starting on or after 1 April 2022.
  • Taxpayers in ITSA with business or property income over £10,000 a year – from accounting periods beginning on or after 6 April 2023.
  • All other taxpayers in ITSA – from accounting periods beginning on or after 6 April 2024.

Electronic sales suppression (ESS)

The possession, manufacture, distribution and promotion of ESS software and hardware will become an offence. New ESS-specific information powers will enable HMRC to identify developers and suppliers in the ESS supply chain and access software developers’ source code.

Promoters of tax avoidance

A package of measures will strengthen existing anti-avoidance regimes and tighten the rules designed to tackle promoters and enablers of tax avoidance schemes.

Follower notice penalties

As previously announced, the rate of penalty that may be charged to people receiving follower notices as a result of using tax avoidance schemes will be reduced from 50% to 30% of the tax in dispute. A further penalty of 20% will be charged if the tax tribunal decides that the recipient’s continued litigation against HMRC is unreasonable. The changes will take effect from Royal Assent.

Tax conditionality

The renewal of certain licences will be conditional on applicants completing checks that confirm they are appropriately registered for tax, as previously announced. The licences concerned are those needed to drive taxis and private hire vehicles, operate private hire vehicle firms and deal in scrap metal. In Northern Ireland this will apply only to taxi licences.

The change will take effect from 4 April 2022 in England and Wales and from April 2023 in Scotland and Northern Ireland.

Unauthorised removal of goods

From the date of Royal Assent, a civil penalty will apply to traders who remove goods that have been seized from the trader’s premises or ‘in situ’ without prior authorisation from HMRC.

OECD reporting rules for digital platforms

The government will consult in summer 2021 on the implementation of OECD rules that will require digital platforms to send information about the income of their sellers to both HMRC and the sellers themselves.

OECD mandatory disclosure rules

The government will consult on the implementation of OECD rules to combat offshore tax evasion by facilitating global exchange of information on certain cross border tax arrangements.

Amendments to HMRC civil information powers

A new Financial Institution Notice will require financial institutions to provide information to HMRC about any specific taxpayer, without the need for approval from the independent tax tribunal.

Investment in HMRC

Additional government investment will enable HMRC to improve its IT systems to make the collection of tax and payments to taxpayers easier, to recruit additional compliance staff and to continue to fund compliance work.