In a consultation paper titled Strengthening Sanctions for Tax Avoidance, HMRC has set out and distributed new proposals to tackle the serial use of tax avoidance schemes.
Tax avoiders already face penalties, but this new consultation lays out additional financial costs like surcharge and additional reporting requirements on users of multiple schemes that fail.
The consultation also considers the introduction of specific penalties for cases where the General Anti-Abuse Rule (GAAR) applies. The GAAR is an overarching means of counteracting abusive tax arrangements.
As part of the clampdown, HMRC has set up a new Serial Avoiders Unit (SAU) to identify and handle users of multiple avoidance schemes. The unit will facilitate resolution of tax affairs for people who have used multiple schemes and want to get their tax affairs in order.
In a bid to recover £7.1bn of disputed tax by the end of March 2016, HMRC has sent letters to over 33,000 Britons telling them they owe the government money. In January it issued 2,500 Accelerated Payment notices and are on track to deliver notices to 43,000 tax avoidance scheme users over the course of the year.
Jennie Granger, director general, enforcement and compliance, HMRC, said, “HMRC is determined to clamp down on the small number of people who engage in tax avoidance. As part of this, HMRC is increasing its focus on users of multiple schemes and increasing the level of resource and intensity devoted to tackling these avoiders. I would strongly encourage people to get in touch to settle their affairs and put the past behind them.”
Speaking about HMRC’s message to serial tax avoiders, David Gauke, financial secretary to the Treasury, said, “The Government introduced the Accelerated Payments regime last year to fundamentally reduce the incentive to engage in tax avoidance. HMRC has already issued notices worth over £1 billion, requiring avoidance scheme users to pay their tax upfront, like the vast majority of taxpayers. Today, we are proposing further action, such as penalties, to tackle the small hard-core group of people who repeatedly use avoidance schemes. Our message is clear: it is time to get out of avoidance and start paying your fair share.”
HMRC is keen to hear comments from businesses, individuals, tax advisers and professional bodies on whether, and how, to introduce the proposed measures. If you want to get involved in the discussions, please submit responses by 12 March 2015 to email@example.com
The consultation paper is available on the Gov.uk website.