AS2016: government to legislate for ‘greater certainty’ in HMRC enquiries

The government will legislate to provide HMRC and taxpayers earlier certainty on individual matters in large, high risk and complex tax enquiries, it was confirmed in the Autumn Statement

The move means that discrete elements of disputed tax can be settled with HMRC while the remainder continues to be under question.

For example, if a taxpayer has £100,000 under dispute, but £10,000 is a straightforward VAT liability, the VAT can be settled while the remaining £90,000 remains in dispute.

The measure is the latest in a series of moves over made by the Conservative-led governments and the coalition before it designed to augment HMRC’s revenue. In 2014, accelerated payment notices, in which disputed tax is paid upfront before the issue is settled at a tribunal. In 2015, direct recovery of debt (DRD) powers were given to HMRC, which allows the tax authority to recover tax and tax credit debts directly from the bank accounts of individuals and businesses where they have persistently failed to engage over the disputed tax.

From April 2017, HMRC will be running its ‘serial avoiders’ regime, which is designed to increase pressure on all taxpayers to reach a quick settlement on tax avoidance arrangements used in years gone by and avoid future schemes. The title 'serial avoiders' is deceptive because it could apply where a taxpayer did only one scheme, and should three of their schemes be defeated, their name, address and business information may be published.

Given these measures and more besides, advisers are now questioning what more can be done on avoidance.

‘It is amazing that, after many years of targeted anti-avoidance legislation, some disguised remuneration schemes tax avoidance schemes still need to be subjected to further sanctions,’ said Institute of Directors’ head of tax Stephen Herring in a comment piece for CCH Daily. ‘But no one should blame the Chancellor or HMRC for introducing these sanctions; higher tax thresholds, lower tax rates and genuine tax incentives need the tax base to be protected and especially so when there is a persistent fiscal deficit.

‘I was, however, surprised that the AS2016 pack indicates that this will bring into the Exchequer only £180m in 2018/19 and £310m in 2019/20 and almost nothing in other years. Perhaps the scope for new anti-avoidance measures to bring in several hundred million per annum is now exhausted?’

Calum Fuller |Assistant editor, Accountancy magazine (up to 2018)

Calum Fuller is former assistant editor of Accountancy magazine and Accountancy Daily, published by ...

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