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28 August 2014

Tax Avoidance Schemes Too Good To Be True?

Tax avoidance schemes & how HMRC is beating themHMRC is warning that if a tax avoidance scheme sounds too good to be true, then it probably is! HMRC’s powers to crack down and recoup revenues lost through tax avoidance schemes have grown significantly over the last couple of years, as we’ve reported from time to time over on the Tax Blog.  Starting this month, HMRC will begin targeting the 33,000 individuals and 10,000 companies which they believe have been using one or more of the 1200 tax avoidance schemes it identified, following the recent inception of the Finance Act and the resulting ‘Disclosure of Tax Avoidance Scheme‘ (DOTAS) disclosures. Those who have used these questionable schemes are likely to fall foul of the ‘accelerated payment’ requirements which the new Finance Act allows HMRC to demand. With some schemes reportedly dating back to 2004, some are in for a very hefty bill.

In a similar move, anyone who holds funds in an offshore account and fails to declare them to HMRC may soon be officially committing a criminal offence and could face the real prospect of a prison sentence. Under the proposed new plans, financial penalties could be unlimited and the prison sentence could be as long as 6 months. Moreover, ignorance of the proposed law and of one’s own financial arrangements would not be acceptable as an excuse. When challenged over these proposals, HMRC responded that they would be aimed only at ‘highly sophisticated’ schemes which were being operated by “stone cold tax cheats”.

With HMRC also now being able to directly raid savings accounts to recoup unpaid tax under certain circumstances, the new powers and proposals are all part of the Chancellor’s bid to balance the UK’s books and reduce the deficit. In the last two years alone, approximately £1.5 billion has already been recouped from those attempting to evade or avoid tax through use of offshore schemes and accounts.

If you or your organisation are in a bit of a tax mess then get in contact with us — we are here to help! With expert knowledge of the tax system and a background in accountancy and tax advice, we can help you navigate the many issues surrounding tax and also liaise with HMRC on your behalf. Call Guy Bridger on 07766 495 871 (offices in Exeter & London) for an initial chat, without obligation.

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