Regulations have been laid before Parliament which make provisions requiring, or relating to, the disclosure of information in relation to notifiable National Insurance Contributions arrangements. The regulations align NIC procedures with the existing rules for income tax purposes.
The National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007 (SI 2007/785) come into force on 1 May 2007.
Finance Act 2004, Part 7, s. 306 – 319 provides for the notification to HMRC of certain tax arrangements or schemes, and proposals for those arrangements or schemes. In particular, s. 306 provides that schemes required to be notified are those which:
- are specifically mentioned by the Treasury;
- enable, or might be expected to enable, a person to obtain a tax advantage; and
- are such that the main benefit, or one of the main benefits that might be expected to arise is the obtaining of a tax advantage.
Where there has been a failure to fulfil the obligation to notify HMRC may seek to impose a penalty. A person who fails to disclose a scheme is liable to an initial penalty of up to a maximum of £5,000. Where after this initial penalty is imposed the failure continues then a further daily penalty of up to a maximum £600 per day will be imposed.
Promoters who fail to give a registration number to their client are also liable to a maximum penalty of £5,000. Initial penalties are determined by the Special Commissioners and there is a right of appeal against the imposition of the penalty. Scheme users who fail to show scheme registration numbers on tax returns are liable to an initial penalty of £100 rising to £500 for a second failure and £,1000 for third and subsequent failures.
SI 2007/785 extents the rules governing the disclosure of certain tax arrangements and the associated penalty regime to National Insurance Contributions.