The government is to take action to close down the avenues for using tax avoidance schemes by increasing sanctions for promoters and users of aggressive schemes, including the introduction of new powers which will require certain tax avoiders to pay any tax they try to avoid upfront.
In the Autumn Statement Chancellor George Osborne said the new moves were expected to bring in more than £6.8bn of new revenue over the forecast period - more than any other fiscal event this parliament. He said the government was determined to tackle taxpayers who 'seek out unacceptable ways to reduce the amount of tax that they pay'.
Under the proposals, the government will introduce new requirements for users of failed avoidance schemes which will oblige them to settle the dispute where the avoidance scheme they are using as soon it has has been defeated in another party's litigation through the courts, with penalties attached for non-compliance.
Osborne also announced plans to introduce 'objective criteria' for identifying and publishing the names of so-called 'high risk promoters'. Scheme promoters will be required to supply more information, or face penalties for failing to comply with the rules. Their clients will also be required to identify themselves to HMRC.
There is to be a new power requiring taxpayers who are using avoidance schemes that have been defeated through the courts to pay the tax in dispute with HMRC upfront. The government is to consult on plans to extend the scope of these powers by widening the criteria used.
Osborne said this will help HMRC tackle an estimated 65,000 avoidance cases which are currently outstanding, around 85% of which date back to before 2010. The Chancellor said this approach would remove the cash advantage of sitting and waiting during an avoidance dispute, and is estimate to bring in £700m over the forecast period.
HMRC's target for securing additional compliance revenues by a further £3.7bn by the end of 2015-16, on top of the £120bn already forecast.
Chas Roy-Chowdhury, ACCA's head of taxation, said: 'We absolutely support the crackdown on evasion and abusive artificial schemes, but any such crackdown needs to reflect what measures the industry and the professions, who operate on the front line, say will work. The government's scarce resources and efforts must be targeted where there will be the best fiscal results and not on quick-win publicity campaigns, which run the risk of stunting growth and distorting behaviour for years to come.'
Neal Todd, a partner in the tax team at international law firm Berwin Leighton Paisner said: 'Imposing the most wide-ranging anti-avoidance package in this Parliament on top of the General Anti Avoidance Rule (GAAR) and so soon after the GAAR was implemented will lead to unnecessary uncertainty about the interplay between various sets of anti-avoidance provisions. It can only further lengthen the UK tax code.'
