Thursday, February 18, 2010
In an effort to improve employer compliance, the Isle of Man has announced legislative changes that will introduce three new penalties on employers: a penalty for ITIP paid late, a late return penalty, and a failure to comply penalty. A tax amnesty was also announced, which will run from April 2010.
The first new piece of legislation – the penalty for ITIP late payments – enables any late monthly remittance to be subject to a penalty. ITIP was introduced in 1987, and is paid by employers on behalf of employees receiving Manx occupational pensions, with income tax assessed on their actual earnings for the year of assessment, rather than the earnings for the previous year of assessment. Under the new legislation, any payment or part payment of ITIP made later than the ninteenth day of each month will be liable to a 5% penalty. Any amount which remains outstanding after a further six months will then be liable to a 5% additional penalty.
The legislation also states that an employer’s annual return that is submitted late will be subject to a civil penalty. Any return submitted later than 30 days from the end of the tax year, or 30 days from the date of cessation as an employer, will be liable to a GBP250 penalty, together with a penalty of GBP50 per day that the return continues to remain outstanding. The legislation introduces a criminal offense if the return remains outstanding for more than six months.
The third penalty will apply to any failure to comply with the Income Tax (Instalment Payments) Act 1974 or the Income Tax (Modified ITIP) Regulations 1987. Any instance of non-compliance with the above legislation will be liable to a GBP250 penalty. This includes the failure to notify that an employer has commenced or ceased to act as an employer.
Lastly, the Treasury has announced that a disclosure amnesty will take place for three months during the tax year commencing April 6, 2010. By concession, the Assessor will waive the imposition of penalties in respect of any voluntary disclosures of previously omitted income made by taxpayers during the period. Interest charges will still apply.