HMRC closing in on tax avoidance (again)

Although not billed as a major fiscal event, the Chancellor’s Spring Statement 2025 unveiled several tax announcements with a range of consultations around providing increased tax certainty for business, expanding HMRC’s data collection powers, reforming penalties for inaccuracies and failure to notify, and giving HMRC more powers to tackle tax avoidance.

Front and centre are the proposals to further empower HMRC to clamp down on those who promote or facilitate tax avoidance or non-compliance. HMRC are running the following consultations:

• Enhancing HMRC's ability to tackle tax advisers facilitating non-compliance: this considers a further raft of powers for HMRC in their approach to advisers who facilitate tax non-compliance. Proposed changes include widening the circumstances in which HMRC can request information from tax advisers, including where HMRC ‘reasonably suspect the tax adviser has facilitated’ an inaccuracy in a return. The consultation says the intention here is to ‘bring the information powers for tax advisers in line with those for taxpayers and third parties found in [FA 2008 Sch 36]’. Chapters 6 and 8 set out further proposals for reform of penalties and the power to publish information (naming and shaming). The consultation runs until 7 May 2025.
• Closing in on promoters of tax avoidance: these are further measures to tackle promoters of tax avoidance, with enhanced powers and stronger sanctions for HMRC. Proposals include expanding the scope of DOTAS to increase the reporting of tax arrangements – with an eye-catching, strict liability criminal offence for failure to notify. New Universal Stop Notices, requiring all persons to stop promoting or enabling schemes which are similar to that outlined in the notice, and Promoter Action Notices, requiring businesses to stop providing services to promoters or enablers, are also under consideration.
  A new Connected Parties Information Notice would require those who HMRC suspect to be connected to the promotion of a marketed tax avoidance scheme to disclose relevant information, with ‘strong sanctions’ for non-compliance. HMRC say that this would target ‘a small but persistent group of individuals [who] are behind the promotion of most tax avoidance schemes’. Finally, Promoter Financial Institution Notices would enable HMRC to obtain promoters’ financial information without tribunal approval. Consultation runs until 18 June 2025.

Other tax announcements include:

• The Making Tax Digital for Income Tax Self-Assessment threshold will be reduced to bring sole traders and landlords with income over £20,000 into the regime, from April 2028. Previously the Government had committed to including this further group by the end of the current Parliament.
• Late payment penalties for VAT and MTD for ITSA will increase from April 2025 for VAT, and for ITSA taxpayers as they join the regime (including, according to the wording of the Spring Statement report, those who join on a voluntary basis from April 2025).
• The Government has hinted at potential reform of ISAs, and it is to review the venture capital schemes (with a series of roundtable discussions proposed for ‘key stakeholders’ in April 2025).

Other consultations:

• Advance tax certainty for major projects consultation (closing 17 June 2025): The government says it recognises the need to go further than the existing routes to certainty on tax for the very largest and most innovative investment projects, given their scale, complexity and range of tax implications. It is therefore consulting on a dedicated service, tailored to these types of projects, which provides statutory certainty over how the tax rules will be applied to a project if it proceeds as planned.
  This proposal is said to take account of the approaches of other jurisdictions which provide forms of advance tax certainty, including through providing taxpayers with a clearer understanding of their tax obligations and increased assurance. Many major projects will interact with a range of departments across government, including the Office for Investment and the Department for Business and Trade. The government therefore intends to integrate this new process alongside other relevant services.
  This consultation also separately announces the outcome of the review of the transfer pricing treatment of Cost Contribution Arrangements (CCAs). Businesses will be able to obtain certainty on the transfer pricing treatment of such arrangements through the UK’s existing Advance Pricing Agreement programme.
• Research and Development tax relief advance clearances (closing 26 May 2025): HMRC are seeking views on widening the use of advance clearances in the R&D tax reliefs to reduce error and fraud, provide certainty to businesses and improve the customer experience.
• Better use of new and improved third party data (closing 21 May 2025). The core scope of this consultation is improving the quality of specific data already acquired under HMRC’s bulk data-gathering powers provided by FA 2011 Sch 23. The datasets in scope are those relating to: (i) financial account information, including bank and building society interest (BBSI) and other interest; and (ii) card sales, i.e. data shared by providers of card acquiring services, such as merchant acquirers. HMRC are also testing early thinking regarding collecting new data from financial institutions on dividend income and other income from investments.
• Behavioural penalties reform (closing 18 June 2025). Building on feedback from the 2024 call for evidence The Tax Administration Framework Review – enquiry and assessment powers, penalties, safeguards, this new consultation proposes two different approaches to reforming penalties for inaccuracies and failure to notify, namely: (1) reforming the existing framework: this approach would retain key aspects of the existing penalty system but simplify how penalties are calculated and applied, and it could involve reducing the number of penalty categories, standardising how behaviour is assessed, and making the rules clearer and easier to follow; or (2) exploring an alternative model: this approach considers a more fundamental redesign of penalties to improve clarity and consistency. It looks at whether a different structure could better achieve fairness, compliance, and deterrence while reducing complexity for taxpayers, agents, and HMRC.
• Tax implications for companies and employees in relation to employees trading their shares on PISCES: including a consultation on draft regulations for the Stamp Duty and Stamp Duty Reserve Tax exemption for PISCES transactions (until 23 April 2025).

HMRC have also published a collection of ‘tax-related documents’ alongside the Spring Statement.