Out-Law News 2 min. read

HMRC anti-avoidance tax take 'significantly boosted' in 2016, new figures show


Additional income tax collected by a specialist anti-avoidance unit within HM Revenue and Customs (HMRC) increased by 80% last year, to reach £886 million, according to figures compiled by Pinsent Masons, the law firm behind Out-Law.com.

The figures showed that HMRC was continuing to prioritise tackling the use of tax avoidance schemes following a number of high-profile cases involving suspected use by celebrities and sportspeople, according to Paul Noble, a tax expert at the firm. Its success meant that it was likely that the Treasury would continue to pour resources into the work of HMRC's counter-avoidance directorate, he said.

"HMRC has had a number of high profile successes when combating tax avoidance, and the government will be looking to build on this," he said. "After criticism for the backlog of unresolved cases, HMRC has sought to sharpen its approach with new powers that it can use to persuade people to exit tax schemes before they reach litigation."

"HMRC wants to demonstrate that no one is out of its reach. It therefore makes sense for anyone who suspects a scheme they are involved in to weigh up their options for either exiting or litigating and, in doing so, to take independent professional advice," he said.

The £886m figure refers to revenue collected by the counter-avoidance directorate over the year to 31 March 2016, up from £494m the previous year. The department was set up in April 2014 to clamp down on the promotion and use of tax avoidance schemes.

The government has published a range of proposals in recent months targeting those who use tax avoidance schemes, as well as the firms and advisers that enable or assist them. Draft legislation included in the 2017 Finance Bill will introduce penalties for accountants, tax planners, advisers and intermediarieswho 'enable' tax avoidance; while HMRC has begun actively publicising its successes when litigating against avoidance schemes and introduced new penalties for "serial" tax avoiders.

Noble said that HMRC would view the latest figures as a "successful validation" of its approach, but warned of the importance of its using its extended powers "in a proportionate manner".

"HMRC has been awarded some fairly far-reaching powers to tackle tax avoidance over recent years, including accelerated payment notices (APNs) which require the payment of sums of money prior to any appeal even being decided," he said. "HMRC needs to ensure it exercises caution when making use of these new powers, and that it does not 'overstep the mark'."

APNs can now be used against the users of over 1,000 different types of tax planning scheme, requiring them to pay any disputed tax up front within 90 days of issue and with no right of appeal. These accelerated payments will be repaid with interest if the scheme is ultimately proven to work by a court or tribunal. APNs can be issued against users of schemes which demonstrate certain 'avoidance hallmarks', such as being subject to disclosure requirements under the Disclosure of Tax Avoidance Schemes (DOTAS) rules.

HMRC had issued around 60,000 APNs under the new rules, worth an estimated £3 billion, as of September last year, according to official figures.

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