We have already had the offshore disclosure facility, the new disclosure opportunity, the Liechtenstein disclosure facility and the new regime for offshore penalties. Now HMRC have announced the formation of new task forces to tackle “tax dodgers”. These specialist teams, according to HMRC, will “undertake intensive bursts of compliance activity in specific high risk trade sectors and locations in the UK”. The first such high risk sector to be targeted is the restaurant trade. HMRC is planning a further nine taskforces in 2011/2012 with more to follow in 2012/2013.
Since the merger of the Inland Revenue and Customs & Excise in 2005, it is generally accepted that HMRC’s risk assessment and compliance techniques have increased in sophistication and this is simply the latest initiative in HMRC’s ongoing campaign against all forms of tax avoidance and tax evasion. As most readers will be aware, £900 million has been ring fenced for compliance activity targeted mainly on avoidance and evasion. Taxpayers who have not utilised the existing opportunities offered to them by the various ‘amnesties’ should be aware that HMRC are in possession of a significant amount of information garnered from a variety of sources, including disclosures made by financial institutions under the money laundering legislation and provided by many of the high street and other banks following extensive use of HMRC’s information powers in 2009. It remains to be seen how HMRC will conduct its compliance campaign. Will it go for high profile tax evaders and mount a number of prosecutions of, for example, individuals in the public eye such as Harry Rednapp or will the target be on smaller businesses with a large number of smaller prosecutions taken to court? HMRC will wish to influence behaviours and an important reason for conducting a prosecution is the wider deterrent message a successful prosecution delivers to the general tax paying public. It will be interesting to see how this initiative unfolds.
In addition to this latest campaign, HMRC published a consultation paper on 31 May 2011 which sets out its strategy for establishing the future relationship between the tax agent community and HMRC. One of HMRC’s proposals is a registration scheme of tax agents who are in business (as opposed to those in the voluntary sector acting on behalf of friends and family) although it may be extended to voluntary tax agents. It hopes that a registration process for tax agents can be in place by 2015. Again, from HMRC’s perspective, this is an attractive initiative intended to prevent less reputable advisers from dealing with HMRC on behalf of their clients. As always, the devil will be in the detail. Further information of how the registration process will operate and what sanctions will be available to HMRC if a tax agent is considered, for whatever reason, not to have met HMRC’s expectations and standards are eagerly awaited. We would suggest that any system of registration of professional tax agents should be overseen by an independent body. Whilst we would support any initiative designed to maintain the highest standards among tax professionals, HMRC should not be a judge in its own court when a person’s livelihood is at stake. The recent litigation relating to Christopher Lunn & Co, commented upon in our last posting, is a salutary reminder to all concerned of what can happen when HMRC refuse to deal with a tax agent.