Proposals to counter the marketing and use of ‘high risk’ tax avoidance schemes – still used by a small but significant number of taxpayers, according to HMRC – are set out in a new consultation document.
The proposals include the listing in regulations of ‘schemes that use contrived arrangements to seek tax advantages in circumstances where they are not intended to be available and which HMRC believes do not deliver the advertised tax advantages’.
Users of a listed scheme would be required to disclose its use to HMRC. ‘They would also be subject to an additional charge on underpaid tax. Taxpayers would be able to protect themselves from the additional charge by paying tax in dispute up-front,’ HMRC said, outlining proposals set out in Budget 2011.
David Gauke, the Exchequer Secretary to the Treasury, said: ‘These are highly aggressive and artificial tax avoidance schemes which we want to stop. For too long, wealthy taxpayers were using these schemes as a cheap loan from government.
‘Our proposals would stop this practice, reducing the cost of HMRC’s interventions and ensuring a fairer tax system. We really want to hear the views of tax advisers and professional bodies.’
Evidence indicates that a number of scheme users view avoidance in purely financial terms, HMRC said. ‘If they perceive that the potential benefits from using the scheme are greater than the potential downsides, they will use the scheme, however contrived it is.’
HMRC anticipate that the reform will have a positive impact on competition ‘by keeping the playing field level for competing businesses’. Comments are invited by 31 August 2011.
Proposals to counter the marketing and use of ‘high risk’ tax avoidance schemes – still used by a small but significant number of taxpayers, according to HMRC – are set out in a new consultation document.
The proposals include the listing in regulations of ‘schemes that use contrived arrangements to seek tax advantages in circumstances where they are not intended to be available and which HMRC believes do not deliver the advertised tax advantages’.
Users of a listed scheme would be required to disclose its use to HMRC. ‘They would also be subject to an additional charge on underpaid tax. Taxpayers would be able to protect themselves from the additional charge by paying tax in dispute up-front,’ HMRC said, outlining proposals set out in Budget 2011.
David Gauke, the Exchequer Secretary to the Treasury, said: ‘These are highly aggressive and artificial tax avoidance schemes which we want to stop. For too long, wealthy taxpayers were using these schemes as a cheap loan from government.
‘Our proposals would stop this practice, reducing the cost of HMRC’s interventions and ensuring a fairer tax system. We really want to hear the views of tax advisers and professional bodies.’
Evidence indicates that a number of scheme users view avoidance in purely financial terms, HMRC said. ‘If they perceive that the potential benefits from using the scheme are greater than the potential downsides, they will use the scheme, however contrived it is.’
HMRC anticipate that the reform will have a positive impact on competition ‘by keeping the playing field level for competing businesses’. Comments are invited by 31 August 2011.
