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Tax changes for 2011–12: Paying and reclaiming tax

The arrangements allowing small businesses to request extra time to pay their taxes (Business Payment Support Service) are to continue for now.

From 1 January 2011, increased penalties applied to people who fail to comply with the disclosure of tax avoidance schemes rules. Failure to disclose a scheme can result in a penalty of up to £600 for each day beyond which the scheme should have been disclosed, although HMRC can apply for a penalty of up to £1 million if the daily rate is not considered a sufficient deterrent.

From 1 April 2011, penalties for offshore tax evasion will be scaled up depending on the tax jurisdiction involved: twice the UK penalty if the jurisdiction does not share information with the UK; one-and-a-half times UK amounts if the jurisdiction will share information but not automatically; and the same as the UK amounts if the jurisdiction automatically shares information.

The government is considering the introduction of a general anti-avoidance rule (GAAR) that would make any scheme intending to avoid tax ineffective without the need for additional legislation. After some consultation a study group has been established, which is due to report back in October 2011.

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