HMRC pledges ‘step change’ in tackling tax avoidance schemes

HMRC has published details of its strategy to tackle the promoters and enablers of mass-marketed tax avoidance schemes, which includes proactively contacting individuals who enter into such arrangements

It pledges to reduce the number of taxpayers being attracted into marketed avoidance schemes for the first time – estimates indicate there were around 3,000 new users of disguised remuneration tax avoidance schemes in the six months from April 2019.

In its policy paper, HMRC stated it is setting up a team to contact taxpayers so that as soon as it becomes aware that a taxpayer may have entered an avoidance scheme, HMRC will contact them to highlight the risks they face and provide advice on how they can leave the scheme.

The move is described as ‘a step change in approach’. Whereas previously HMRC would wait for taxpayers to file their self assessment return, before enquiring in to the scheme, going forward, HMRC will be using employers’ PAYE RTI returns and other data to spot avoidance risks.

Taxpayers will then be contacted early, where possible within a couple of months of them potentially entering a scheme or before they submit a self assessment return, to make them aware of HMRC’s concerns.

In the 2020/ 2021 tax year HMRC will run an awareness campaign targeting certain sectors of the economy where promoters are particularly active, for example, the IT, medical and oil and gas industries.

HMRC says it will continue to pursue the 20 to 30 active promoters currently operating in the market. As part of this it is planning to co-ordinate intensive investigative efforts on the tax affairs of the individuals behind the promotion, and their business entities.

The policy paper indicates there will shortly be a call for evidence on what further action is required to address disguised remuneration tax avoidance.

The call for evidence will include questions on tackling promoters of tax avoidance, and will examine options for disrupting the business models and economics of promoters, disrupting the supply chain of avoidance and areas for strengthening the tools to tackle promoters.

These include looking at ways to incentivise the promoter’s clients to engage with and share information with HMRC, and joining forces with tax authorities in other countries, sharing information through established gateways and building joint strategies and plans to tackle overseas elements of the promoter business.

HMRC also says the government will look to switch the dynamics so that promoters hold some of the financial risk of the avoidance schemes, which do not work.

In addition, HMRC says it will co-ordinate actions with other industry partners, including the Advertising Standards Authority, which has previously taken action against promoters for misleading advertisements and who are now considering a wider strategy to tackle those advertising tax avoidance schemes.

HMRC will also work more closely with the Insolvency Service, to combat promoters who seek to use insolvency as a way to escape their obligations. 

Policy paper Tackling promoters of mass-marketed tax avoidance schemes

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