The government is consulting on a new, tougher approach in tackling tax avoidance.
A consultation was launched on 24 January, seeking views on proposals that would see HM Revenue & Customs (HMRC) require the upfront payment of any disputed tax associated with schemes subject to the Disclosure of Tax Avoidance Schemes (DOTAS) regime and taxpayers involved in tax investigations under new anti-avoidance legislation, the General Anti-Abuse Rule (GAAR).
HMRC said: “This will remove the tactic that some taxpayers currently use of holding onto the disputed tax – sometimes for years – while their case is being investigated and litigated. In most cases, the tax being avoided through these schemes will ultimately be due as HMRC wins over 80 per cent of avoidance cases that it litigates.”
David Gauke, Exchequer Secretary to the Treasury, said: “Around 65,000 people and businesses have used marketed tax avoidance schemes that need to be investigated and litigated.
“But when an avoidance scheme is challenged in court, the tax system currently allows taxpayers to hold on to the disputed tax, no matter how tenuous their scheme and how unlikely they are to succeed. The taxpayers and scheme promoters are incentivised to sit back and delay as long as possible.”
Under the plans outlined in the consultation, which closes on 24 February, taxpayers would be free to continue to make their case to a tax tribunal or court and, if successful, their money would be returned with interest.
With the government and HMRC intent on closing the UK tax gap – the difference between tax owed and tax collected – the range of tax crackdowns and tax investigations is likely to continue to grow. In the event of a tax investigation, working with the experts at Taxation-Investigation can help to clarify the taxpayer’s position and identify their options.
We’ll provide constructive advice and support, enabling taxpayers to focus on their day-to-day affairs while we liaise with HMRC inspectors to bring the investigation to a satisfactory conclusion. Where tax affairs are in order, we will argue the case robustly and we will also negotiate any settlement necessary with a view to minimising HMRC claims for any tax and penalties.