Proposals for combating serial tax avoiders
Accelerated payment notices that require a taxpayer involved in a tax avoidance scheme and which requires them to pay tax up front before going to tribunal are just not enough to sate HMRC’s blood lust.
They now want to impose further punitive measures on those who refuse to bend the knee when it comes to using tax avoidance schemes. In a recent consultation document titled, ‘Strengthening Sanctions for Tax Avoidance’, that runs for 6 weeks until 12th March, the Revenue propose a number of extra measures to pummel serial tax avoiders.
Despite the success and progress that the Government has made in tackling tax avoidance there still remains a small number of taxpayers who are undeterred in their pursuit of avoiding tax and willing to take the risk. A serial avoider may:
- Use a number of tax avoidance schemes each year that were intended to offset their tax liability several times over in the hope that at least one will work.
- Repeatedly use tax avoidance schemes to shelter the same type of income year after year.
- Repeatedly use avoidance schemes to cover the majority of income or gains as they arise.
- Often use tax avoidance schemes to cover major life or commercial events.
Amongst the measures being bandied by HMRC is the introduction of a surcharge on the repeated or concurrent use of avoidance schemes that fail.
Culprits could also be required to provide certificates about their use of tax avoidance schemes to demonstrate whether or not they have used a scheme in a particular period. They could also be compelled to provide, as a matter of course, more documents and information about their tax affairs or to accompany their tax return, rather than waiting for an enquiry or information request from HMRC.
Conduct or stop notices could also be introduced, which would require the individual to do or to refrain from doing certain things, with a view to improving their tax compliance.
Some serial tax avoiders may have a reputation to protect which HMRC are keen to prey upon by threatening to name and shame serial avoiders and thereby deterring future involvement in high risk avoidance schemes.
Once the consultation period expires HMRC will publish a response document and any consequential legislative changes will be announced at Budget 2015.
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