Out-Law News 2 min. read
05 May 2016, 9:33 am
Paul Noble a tax investigations expert at Pinsent Masons said “Returns from investigations have been healthy this year, and HMRC will likely want to build on this success. High net worth individuals and other wealthy taxpayers are likely to face further scrutiny as a result - both here and abroad.”
He said that since 2012, following news stories on the use of tax avoidance schemes by celebrities, HMRC has stepped up its investigations into income tax avoidance schemes. Targets have included some of the UK’s most well-known public figures, including actors, musicians, sports stars and comedians.
HMRC's new Counter Avoidance Directorate was created in April 2014 with the primary objective of cracking down on the promotion and use of avoidance schemes. Noble said that the Directorate has "significantly sharpened HMRC’s abilities to target schemes which it deems are avoidance".
The unit has a range of tough powers to find and demand disputed tax, including the issue of Accelerated Payment Notices (APNs). APNs require upfront payment of the tax under question within 90 days where an avoidance scheme has been used. Payment has to be made before the case has been fully resolved or even heard at tribunal. There is no procedure for appealing an APN.
Several judicial review claims have been brought in respect of HMRC's issue of APNs, but none has been successful to date. The Court of Appeal has granted permission for an appeal against a decision of the High Court rejecting claims that HMRC had acted improperly in issuing APNs in a case brought by investors in certain Ingenious Media film partnership schemes.
Paul Noble said: “It is also worth noting some of the wider and more negative implications associated with HMRC's clampdown. HMRC have been and continue to be granted huge new powers to help them close and clear the many thousands of open avoidance cases. It is important that such powers are not abused.”
“HMRC needs to ensure that it makes use of some of its new and more contentious tools in a reasonable way - and that it focuses on activity which constitutes real abuse” he said.
A recent HMRC survey of more than 1,000 people found that more than half (63%) believed that use of tax avoidance schemes is still ‘widespread’. A similar number (61%) said that it was ‘never acceptable’ to make use of such schemes.
Almost two-fifths of participants (37%) said that they felt HMRC is putting ‘too little effort’ into reducing the use of tax avoidance schemes.
Paul Noble said that public support for a tax avoidance crackdown has increased pressure on HMRC to prioritise the tackling of schemes.
“The survey highlights the public’s negative view of these schemes and the support for more action, and HMRC is likely to view this as further support for tackling schemes" he said.