23 March 2018
This video discusses the tools that tax authorities are using to tackle tax avoidance schemes as announced in this year's UK budget, March 2016. New regimes and measures have been set to tackle all participants, including promoters and serial avoiders and with the finance bill introducing new criminal offence for offshore tax evasion, authorities really do have more powers than ever.
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This year's Budget announcements saw the Government coming good on its threat to crack down on tax avoidance and off shore tax evasion.
The tax authorities have taken a triple pronged approach to comprehensively tackle all participants in tax avoidance:
1. Promoters are targeted through broader measures which set a new threshold for issuing conduct notices – just three defeats over an eight year period will be enough, and this can include instances where HMRC persuades investors to accept that the scheme doesn't work, as well as formal court defeats.
2. Serial Tax avoiders will be subject to a Special Regime where HMRC must issue a notice to the user of a tax avoidance scheme which has been defeated. The notice is likely to cover a 5 year period placing an annual reporting requirement on the tax payer as well as a series of increasing sanctions including penalties, publication of the taxpayer's details as well as denial of access to tax reliefs.
3. The government is also likely to legislate to introduce a new penalty of 60% of the tax due in all cases which are successfully tackled by the General Anti-Abuse Rule.
In respect of tax evasion, the long threatened new criminal offence for offshore tax evasion will finally to make its appearance in the Finance Bill 2016. This offence will remove the need for the Crown to prove criminal intent for the most serious cases.
The government has also announced its intention to increase the civil penalties for deliberate offshore tax evasion by linking the penalty to the value of the asset on which the tax was evaded.
Finally, the government is proposing to introduce civil penalties as well as naming and shaming all those advisors who enable offshore tax evasion.
The era of favourable disclosure facilities is now over and HMRC is more equipped with more punitive powers than ever. Anyone with concerns about their tax position should act now.