Revenue will not take enforcement penalties will be added to action. the debt book. 4. Remove all Not met Not met Not met This option late payment have a higher cost penalties and Unfair for compliant taxpayers as Reduced compliance impact A UOMI only rate may than the impose UOMI the financial cost of a taxpayer’s as taxpayers will have lead to some compliant recommended only. non-compliance has been reduced growth in their tax taxpayers deciding that it option. This makes completely removed. There is no debt. However overall, the is financial justification this option less penalty imposed on taxpayers that compliance impact may to pay other creditors viable for the do not pay on time. increase as indebted instead of Inland government. taxpayers will have more Revenue and thus interaction with Inland become non-compliant. Revenue as Inland Revenue make greater attempts to The lack of a penalty for encourage them to pay the non-compliance would tax debt. likely lead to an erosion of taxpayer confidence in Likely increase in Inland the integrity of the tax Revenue’s administration system, as compliant and enforcement costs due taxpayers will perceive to an increase in total tax that non-compliant debt being managed. taxpayers are not being penalised. 5. Broad Not met Not met Not met The impact is discretion to difficult to measure impose Due to the level of subjectivity in Taxpayers will incur higher This option rewards as it relies on penalties based the decision making process, it is compliance costs with taxpayers that subjectivity. on individual highly unlikely Inland Revenue will increased contact with successfully evade Inland Therefore it is not circumstances be able to ensure consistency in Inland Revenue to discuss Revenue.
Revenue will not take enforcement action. penalties will be added to the debt book. 4. Remove all late payment penalties and impose UOMI only. Not met Unfair for compliant taxpayers as the financial cost of a taxpayer’s non-compliance has been completely removed. There is no penalty imposed on taxpayers that do not pay on time. Not met Reduced compliance impact as taxpayers will have reduced growth in their tax debt. However overall, the compliance impact may increase as indebted taxpayers will have more interaction with Inland Revenue as Inland Revenue make greater attempts to encourage them to pay the tax debt. Likely increase in Inland Revenue’s administration and enforcement costs due to an increase in total tax debt being managed. Not met A UOMI only rate may lead to some compliant taxpayers deciding that it is financial justification to pay other creditors instead of Inland Revenue and thus become non-compliant. The lack of a penalty for non-compliance would likely lead to an erosion of taxpayer confidence in the integrity of the tax system, as compliant taxpayers will perceive that non-compliant taxpayers are not being penalised. This option have a higher cost than the recommended option. This makes this option less viable for the government. 5. Broad discretion to impose penalties based on individual circumstances Not met Due to the level of subjectivity in the decision making process, it is highly unlikely Inland Revenue will be able to ensure consistency in Not met Taxpayers will incur higher compliance costs with increased contact with Inland Revenue to discuss Not met This option rewards taxpayers that successfully evade Inland Revenue. The impact is difficult to measure as it relies on subjectivity. Therefore it is not
2016-ris-bteirm-bill-4.docx