12 May HMRC cracks down on tax avoidance schemes

A recent government estimate says that as much as £1.8bn is lost every year because of tax avoidance schemes. As this money is needed to fund public services, such as schools and hospitals, this leads to the government having to borrow money. To tackle this, HM Revenue & Customs – HMRC – is being given additional powers.

Check what you owe

While much tax avoidance is undoubtedly deliberate, with businesses choosing to participate in tax avoidance schemes, tax laws are complicated; therefore, it is worthwhile investing in professional support. An accountant will not only make sure you are paying everything you owe but also ensure you claim any deductibles to which you are entitled, meaning you don’t pay more tax than you need to.

To find an accountant, carry out an internet search relevant to your region; for example, if you enter the search term ‘Worcester accountants’, you will see results such as www.randall-payne.co.uk/services/accountancy/worcester-accountants.

HMRC’s new powers

The reforms to HMRC’s new powers focus on an expansion of the Disclosure of Tax Avoidance Scheme, usually known as DOTAS.

A new hallmark will be introduced to identify tax avoidance schemes that must be disclosed, as many such schemes are currently slipping under the radar. A stricter liability offence is also being introduced for businesses and individuals who fail to notify arrangements under DOTAS. Being caught can result in up to two years in prison and an unlimited fine.

Promoters who feel they have been unjustly served by the decision to penalise will have the option to appeal to a tribunal; however, they will be issued with a Universal Stop Notice – USN – and a Promoter Action Notice – PAN. This means those enabling or promoting such schemes must stop immediately, even if they are appealing a decision and penalty. This is just part of the targeted action aimed at legal professionals who advise or support promoters.

While this can sound daunting, a good accountant will be well-informed on these new powers and can advise you on any changes you need to make.