As we conclude our series of Insights into the recent Budget, it’s worth a quick reminder that HMRC are likely to be taking a robust approach to Covid 19 fraud and late payment of tax.

HMRC tax investigations

Tackling Covid-19 fraud

In one of the largest responses to fraud risk, the government will invest over £100 million in a Taxpayer Protection Taskforce of 1,265 staff from HMRC to combat fraud within Covid-19 support schemes, including CJRS and SEISS.  Further measures will be taken to strengthen law enforcement for fraudulently claimed Bounce Back Loans.

The 100% tax rate on incorrectly claimed SEISS

The tax rate on incorrectly claimed SEISS will be 100% to allow 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.

Reform of penalties for late submission and late payment of tax

The government will reform the penalty regime for VAT and Income Tax Self-Assessment (ITSA) to make it fairer and more consistent. The new late submission regime will be points-based, and 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. These reforms will come into effect:

  • for VAT taxpayers, from periods starting on or after 1 April 2022;
  • for taxpayers in ITSA with business or property income over £10,000 per year, from accounting periods beginning on or after 6 April 2023;
  • and for all other taxpayers in ITSA, from accounting periods beginning on or after 6 April 2024.

As always, you if believe you may be at risk of a tax investigation, please call us to discuss it today.