Senior tax advisers have predicted ‘thousands’ of national insurance disputes
will reach the courts as a result of HM Revenue & Customs’ renewed crackdown
on tax avoidance.
HMRC chairman Dave Hartnett told Accountancy Age last week that only
settlements of at least 100 pence in the pound would be accepted in future on
national insurance contributions (NICs) cases, as part of a general goal to make
sure tax avoidance is ‘not worthwhile’ by 2008.
Tax advisers have responded angrily to both the goal and the NICs decision.
The HMRC has decided that settling for less adds an incentive to avoidance,
and as part of a range of measures it is currently pursuing will no longer offer
John Whiting, tax partner at PricewaterhouseCoopers, said that HMRC’s
attitude to tax avoidance in general begged a difficult question: ‘Where are we
drawing the line? That’s what it’s all about.’
HMRC would not seek to pursue tax avoidance on ISAs and pensions, Whiting
said. ‘We are taxed by the plain letter of the law. The essential issue is to
get the law right.’
He also raised questions as to why avoidance was being discussed as opposed
to evasion: ‘Tax evasion costs a lot more than avoidance.’
Chas Roy-Chowdhury, head of taxation at the ACCA, said: ‘Clearly [Hartnett]
wants to target accountants. Are businesses expected to maximise the amount of
tax they pay? Tax avoidance has been turned into a bogey figure, the creator of
all evil and of all problems in the tax system.’
Other tax experts said that the decision would spark hundreds, if not
thousands, of cases.
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