Budget paves way for more tax investigations

Chancellor George Osborne has used his final Budget speech to warn that the UK’s tolerance for people who fail to pay their fair share of tax “has come to an end”, signalling the likelihood of more tax investigations.

He also unveiled a package of measures designed to continue the government’s crackdown on tax avoidance and evasion, including plans for HM Revenue & Customs (HMRC) to issue 21,000 more accelerated payment notices than originally announced.

The notices enable HMRC to demand payment of disputed tax upfront when taxpayers are involved in open enquiries or appeals relating to certain tax avoidance schemes.

Other measures included the early closure of the Liechtenstein Disclosure Facility (LDF), an agreement between the Liechtenstein and HMRC giving UK taxpayers with previously undisclosed assets to put their tax affairs in order on favourable terms, including a ten per cent fixed penalty on underpaid liabilities. The LDF had been due to close in April 2016 but will now do so at the end of this year.

Similar agreements with the Isle of Man, Guernsey and Jersey, known as the Crown Dependencies Disclosure Facilities, will also close at the end of this year instead of in September 2016.

The Budget said that the schemes would close to make way for a tougher disclosure facility, to be offered between 2016 and mid-2017, with penalties of at least 30 per cent on top of tax owed and interest and with no immunity from criminal prosecutions in appropriate cases.

Mr Osborne told MPs on 18 March: “This country’s tolerance for those who will not pay their fair share of taxes has come to an end.”

Regardless of the outcome of the general election on 7 May, all the leading political parties are committed to closing the tax gap – the difference between tax due and tax collected – which is likely create an enhanced risk of tax investigations and the potentially serious consequences of these.

With this in mind, any taxpayer concerned about their own tax affairs, and who believes they might become subject to a tax investigation, would be wise to seek expert advice, including in relation to making a disclosure under the LDF or Crown Dependencies Disclosure Facilities.

Our specialists at Taxation-Investigation can provide specialist advice to clarify their situation and on the options available to them, so they can make informed decisions about the best way forward. We can also assist in mitigating outcomes or presenting a robust defence where tax affairs are in order.