Penalty system for abuse of apprenticeship levy

The HMRC penalty system for inaccurate information in returns and documents has been updated to apply to the apprenticeship levy.

A factsheet published by the tax authority outlines the regime and how it will be applied. The factsheet makes clear that HMRC may impose a penalty if it is sent a return or other document that contains an inaccuracy, and the inaccuracy results in tax being unpaid, understated or over-claimed and was careless, deliberate or deliberate and concealed.

Unprompted disclosure of a careless inaccuracy will result in a fine of between 0% and 30% of the tax due, while those prompted by HMRC will attract fines of 15% to 30%. Deliberate inaccuracies disclosed unprompted will receive charges of between 20% and 70%, while those discovered by HMRC will be fined 35% to 70%. Finally, concealed and deliberate inaccuracies will receive a penalty between 35% and 100% for unprompted disclosures while those prompted by HMRC will be given fines of between 50% and 100%.

Moreover, ‘company officers’ may have to pay some or all of the company’s penalty if the penalty is due to their actions and they have gained, or attempted to gain, personally from a deliberate inaccuracy. They may also have to pay if the company is about to become insolvent – even if the officer did not gain personally from the deliberate inaccuracy.

If the company pays the penalty, HMRC will not ask the individual officers to pay. A company officer is a director, shadow director, company secretary or manager of a company, or a member of a limited liability partnership.

For the apprenticeship levy, the fines will relate to tax years starting on or after 6 April 2017.

The levy requires employers, with a salary bill of over £3m a year, to pay 0.5% of their total salary bill into the apprenticeship service, part of the government’s efforts to encourage investment in apprentices.

The HMRC factsheet can be read here.

CCH Daily