TaxPersonal TaxTaxation – IR stamps on tax-dodge ploys

Taxation - IR stamps on tax-dodge ploys

A firm of accountants was one of ten firms raided last week by the Inland Revenue in a crackdown on National Insurance avoidance schemes involving payments in kind of luxury items.

Accountancy Age

has learned that, over the last two weeks, the special compliance unit of the Inland Revenue has made ten related raids on organisations accused of avoiding NI payments totalling tens of thousands of pounds.

The alleged actions are said to include company directors paying themselves in oriental carpets to avoid making NI contributions.

The Revenue confirmed it had carried out raids but refused to provide further details. One source, however, said the Revenue had taken a ‘heavy-handed’ approach by staging the raids early in the morning and had taken away large quantities of documents and materials.

Duncan Groves, director of the pay and benefits team for tax consultancy The Chiltern Group, outlined the workings of a typical scheme: ‘The employer will agree to make an additional bonus payment to his employee. Instead of paying by cheque, it’ll use a third party, such as an accountancy firm, to transfer the money after the paperwork is completed.’

It is hard to prove that the carpets ever change hands, though. ‘The Contributions Agency’s line is that such schemes are illegal as they represent earnings to an employee. But there’s a very fine line between tax avoidance and tax evasion,’ Groves added.

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