Plans by HM Revenue &
Customs to recoup some of the lost money are bound to crop up in the
imminent pre-Budget report, if not necessarily in the speech of chancellor
At the moment, though, it is unclear exactly what the taxman will do about
tackling the problem.
The issue as it related to individuals a few years ago was resolved by the
IR35 clause, but people are now setting up and joining ‘composite’ companies –
essentially just groups of people – as a way of getting around the rules.
Composite companies operate as service companies that provide employees.
Since the employees of a composite company are contractors, the employing
company does not have to pay national insurance contributions for them.
While HMRC already has the powers to tackle this practice, with
IR35, it isn’t using
them and favours a broader solution instead.
‘I think that enforcement is the heart of the problem. They have the laws in
place but it’s about enforcing them,’ said Redston.
HMRC officers could go for each individual company set up within a composite
if they are avoiding tax. But Redston said doing this could create a resource
issue, perhaps requiring hundreds of staff to target individuals one by one.
Another option would be to send out personal liability notices to those
running the composites, making the composites liable for the companies avoiding
tax through them.
‘HMRC has a lot of weapons it is not using, and I’m not sure why,’ said
Redston. ‘It seems to me it could.’
Making Tax Digital will impose significant additional tax compliance costs on small businesses for little or no medium term benefit, tax and small business experts told MPs
The drive towards a fully digital tax regime is an admirable one, but mandation is simply wrong, according to one of the UK's most senior tax technology practitioners - Paul Aplin
HMRC has won its tenth successive case against tax avoidance schemes promoted by NT Advisors. The Court of Appeal has ruled that NT ... read more
HMRC is continuing to ramp up the number of raids on premises it carries out as part of criminal investigations, searching 761 properties in the last year