In its departmental plan for 2015-2020 published last month, HMRC set out it’s role “to help the honest majority to get their tax right and make it hard for the dishonest minority to cheat the system”. One of the headline objectives for this period is: “maximise revenues due and bear down on avoidance and evasion” as such behaviour damages the ability of the tax system to raise revenue fairly and impose additional costs on all honest taxpayers.
The plan recalls that during the last Parliament, HMRC secured £100 billion in additional compliance revenue as a result of actions taken to tackle evasion, avoidance and non-compliance, but confirms “there is more to do”. It sets out the goal to maximise revenues due and bear down on tax avoidance, tax evasion and other non-compliance through a well-designed tax policy, a transformed compliance strategy and effective delivery through digital channels. It sets out the ambition to build on the success in collecting £517.7 billion in total revenues over 2014 to 2015 (last full year for which figures are available).
Such a clear statement of intent could be seen as a move to challenge the extensive criticism levelled at HMRC – most notably by the House of Commons Public Accounts Committee (PAC) – as to how it deals with corporate tax settlements - struck with the likes of Google. MPs lamented the fact that it was difficult for HMRC to penalise multinational companies for tax avoidance due to the scope for different interpretations of complex tax rules. The PAC welcomed HMRC’s plans to strengthen the penalty regime so that it can penalise habitually aggressive tax planners and set out it’s expectation that HMRC implements these changes as soon as possible and enforce them rigorously.
Indeed, HMRCs new plan clearly sets out its aim to ensure global companies pay their fair share in tax by supporting the government’s leading role in the reform of international tax rules. It commits to reviewing the international country-by-country tax reporting rules and consider the case for making this information publicly available on a multilateral basis.
One of HMRCs clear goals is to increase the number of criminal prosecutions relating to serious and complex tax crime. The aim being to focus on wealthy individuals and corporates with a goal of 100 by the end of this Parliament. £800 million is being invested into additional work to tackle evasion and non-compliance with the goal to raise an additional £5 billion a year by 2019 to 2020 from tackling tax avoidance and tax planning, evasion and compliance. The plan underlines HMRC support for the government’s plan to “make it a crime when companies fail to put in place measures to stop tax evasion in their organisation, making sure that penalties are large enough to punish and deter.”
The issues of offshore evasion remains a key one and we expect that the Budget 2016 to be presented on 16 March offer final details on the proposals set out in the Finance Bill 2016 (presented in December 2015) that sets out measures to introduce tougher anti-offshore tax evasion regime, which will include new criminal and civil sanctions. (See our related blog, HMRC proposals for tackling off-shore tax evasion seriously flawed).
With the political and media pressure on to tackle aggressive tax planning it is clear that from now on that advisors and individuals need to be alert to the trend for HMRC to aggressively pursue those who try to avoid tax increasingly via criminal law means.