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Think carefully about the costs, advises Revenue
The Revenue has issued a warning to potential tax avoiders, claiming it is “very successful” at tackling legal tax dodging.
The department’s message is aimed at those actively considering an avoidance scheme or likely to be “lured” into an arrangement. They are advised to think carefully about the potential costs and disruption of a lengthy enquiry and litigation.
HMRC admits that affairs can be fairly planned to make sure that no more tax is paid than is necessary, but adds that there are signs that suggest an artificial set-up, including benefits or returns out of proportion to real economic activity, expense or investment risk.
Taxpayers are also told to check all claims made by a scheme’s promoter and make sure that the small print is understood – and be aware that the taxman never approves avoidance arrangements.
Finally, if a set-up relies on concealment, pretence, non-disclosure or misrepresentation of the facts, it may be tax evasion.
The Revenue recommends that advice is taken from an agent not connected with the scheme before it is entered into. Ask an adviser offering an introduction to a scheme promoter if he or she is being paid commission or otherwise rewarded for finding participants.
The department’s anti-avoidance group can be contacted by contacted via a secure enquiry form. Information on avoidance schemes known to the taxman is compiled under the Spotlights service.
HMRC have announced a consultation on two avoidance issues: a proposed new set of obligations for high-risk promoters, their intermediaries and users; and encouragement for users of avoidance schemes to settle their tax affairs after similar cases have lost in court or tribunal.
The department is also interested in views on a proposed extension to the prescribed information to be provided under the disclosure of tax avoidance schemes (DOTAS) rules.
The consultation is open until 4 October. Responses can be made by email or mail to Lesley Hamilton (regarding high-risk promoters, DOTAS and mis-selling: sections 3, 4, 6 and 7) or Peter Woodham (follower penalties: section 5) at HMRC, CTISA Anti-Avoidance Group, Room 3C/04, 100 Parliament Street, London SW1A 2BQ.
Agents with experience of DOTAS or the VAT disclosure regime are invited to complete a questionnaire on effectiveness and the levels of administrative burden.
The questions do not relate to specific discloseable schemes or arrangements. Responses should be submitted no later than 20 September. They will be anonymised, confidential, and analysed collectively. Information will not be used by the authorities beyond the scope of the review, or to identify individual promoters or users.
