The issue of tax avoidance schemes has become widely publicised, particularly over the last 18 months, in part fuelled by the media microscope fixing firmly on the finances of celebrities and multinational companies. Public opinion has generally hardened about what are broadly termed tax avoidance schemes and the government has been clamping down on specific types of strategies designed to allow individuals and companies to push the boundaries of tax ‘efficiency’. The result has been HMRC taking a tougher line on avoidance and anyone found to be involved in the associated schemes.
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A key part of the picture as far as tax planning schemes are concerned in the UK at present is the fact that amounts can be demanded retrospectively where avoidance is discovered. The result of which is that HMRC has been penalising companies and individuals with ‘Accelerated Payment’ letters informing them that they owe, in some cases significant, sums of money in unpaid taxes.
Finance Bill 2014
Meanwhile, the British government has moved to reinforce HMRC’s powers to investigate the financial affairs of suspected tax avoiders and to clampdown on activities that a variety of relevant parties are particularly keen to discourage. Central to the latest moves being made by the Treasury to this end was the introduction of the 2014 Finance Bill, which gives HMRC a remit based on emphasising a “pay now, argue later” strategy.
The legislation means companies and individuals can be required to make payments upfront in relation to money allocated to disputed tax planning schemes. The practices being looked at and targeted are being designated specifically by HMRC as potential tax avoidance schemes or as schemes that may go against more general ‘anti-abuse’ rules.
Under the terms of the new government legislation, HMRC has the power and scope to investigate tax planning schemes dating back as far as 10 years, with their participants potentially liable to sizable tax bills as a result.
At Begbies Traynor we’ve seen a sharp increase in the number of referrals relating to issues of tax avoidance as HMRC and the government ramp up their efforts to deter and shut down schemes believed to be designed for that purpose.
Fundamentally, it is the case that where money has been wisely sheltered from taxation there is nothing in the recent developments that represent real causes for concern. However, the avoidance clampdown can potentially cause problems in a situation whereby money being sheltered from taxes has been invested in assets that are difficult to quickly liquidate, or which have considerably reduced in value over time.
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If you are unclear about any issues relating to tax avoidance schemes and how recent changes in relevant laws might affect your business and its finances then you can call us directly to find out more. You can speak with one of our specialists directly or arrange a free and confidential consultation at a time and a location of your choosing.