HMRC has ploughed an additional 7% investment into the counter-avoidance directorate staff over the past 12 months, ahead of the introduction of the Criminal Finances Act 2017 at the end of this month which will make companies and partnerships criminally liable if they fail to prevent tax evasion by either a member of their staff or an external agent
According to a freedom of information request from law firm Collyer Bristow, HMRC’s investment in counter-avoidance directorate staff is up from £54.9m in 2014/15 to £58.6m in 2015/16.
The CAD was created in 2014 and brought together operational and policy work on marketed tax avoidance schemes into a single directorate. The firm says this concentration of expertise has proved successful, with investigations undertaken by the directorate resulting in additional income tax receipts rising by 79%, up from £494m in 2014/15 to £886m in 2015/16.
Action by HMRC against marketed tax avoidance schemes includes the Ingenious film financing scheme, the Liberty tax scheme and the Robert Fraser Group, which allowed investors to claim back losses on investments into ship salvage companies.
Collyer Bristow says the increased investment in staff at the counter-avoidance directorate comes ahead of the introduction of the Criminal Finances Act on 30 September, which will allow HMRC to impose much tougher penalties on accountants and advisers who market tax avoidance schemes.
James Badcock, partner and head of private client team at Collyer Bristow, said: ‘HMRC’s latest investment shows it’s continuing to turn up the heat on marketed tax avoidance schemes.
‘Investigations undertaken by the counter-avoidance directorate resulted in HMRC collecting an additional total of £2bn last year. Further investment will likely increase receipts even further.
‘Tax avoidance schemes are generally devised and marketed by specialist advisory firms, and while they may be based on a plausible technical interpretation of tax law, a growing array of hurdles have been placed in their way meaning participants can become embroiled in lengthy and costly investigations and legal proceedings.
‘Once the Criminal Finances Act comes into force, if an employee is suspected of facilitating tax avoidance, then the company they work for is also automatically under suspicion. With this in mind, many companies are likely to reassess their offering with regards to avoidance schemes.’
Report by Pat Sweet
