Additional reporting for serial avoiders, HMRC plans

PEOPLE INVOLVED in multiple tax avoidance schemes could face additional financial costs and reporting requirements, under new HM Revenue & Customs plans.

People involved in avoidance schemes already face the prospect of accelerated payments, where the disputed tax is paid up-front before going to tribunal, while the general anti-abuse rule (GAAR) and disclosure of tax avoidance schemes (DOTAS) regimes are designed to catch abusive structures.

Currently, the government believes, neither the threat of enquiry nor the burden of compliance are likely to carry weight with repeated avoiders.

But serial tax avoiders could now face a surcharge on the repeated or concurrent use of tax avoidance schemes that fail, HMRC has suggested in a consultation.

Special measures, too, could be introduced that would see them required to provide certificates about their use of tax avoidance schemes to show whether or not they have used a tax avoidance scheme in a particular period.

Similarly, they could be compelled to provide documents and information about their tax affairs, rather than waiting for an enquiry or information request from HMRC.

Conduct notices could also be introduced, requiring them to do – or refrain from doing – certain things in order to improve their tax compliance.

A history of engaging in avoidance schemes, the use of schemes marketed by high-risk promoters and failure to comply with DOTAS could all attract the use of these measures, HMRC said in its consultation.

Financial secretary to the Treasury David Gauke (pictured) 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 £1bn, 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.”