HMRC have published further updates on the proposal to clamp down on tax avoidance schemes.
The measure is targeted at the most persistent and determined promoters and enablers of tax avoidance.
The proposed legislative changes are designed to clamp down on the supply of tax avoidance arrangements and include:
- a new power for HMRC to seek freezing orders that would prevent promoters from dissipating or hiding their assets before paying the penalties that are charged as a result of them breaching their obligations under the anti-avoidance regimes
- new rules that would enable HMRC to make a UK entity, who facilitates the promotion of tax avoidance by offshore promoters, subject to a significant additional penalty
- a new power to enable HMRC to present winding-up petitions to the Court for companies operating against the public interest
- new legislation that would enable HMRC to name promoters, details of the way they promote tax avoidance, and the schemes they promote, at the earliest possible stage, to warn taxpayers of the risks and help those already involved to get out of avoidance.
The proposals are designed to build on existing anti-avoidance measures. They will reduce the scope for promoters to market tax avoidance schemes, disrupt their activities and do more to support customers to steer clear of and leave tax avoidance arrangements.
The new power to seek freezing orders is designed to ensure that any penalties charged by HMRC under the anti-avoidance regimes can be subject to an order, and that funds can be ring-fenced to make sure that promoters and enablers of tax avoidance schemes cannot escape the financial consequences of their non-compliance.
The additional penalty for UK entities involved in an offshore promoter’s business activities is designed to deter these entities from facilitating the sale of avoidance schemes in the UK. Those that are not deterred may face a penalty up to the total fees earned by the scheme.
The new power to enable HMRC to present winding-up petitions to the Court is designed to disrupt the business activities of companies who are operating against the public interest by removing them from the market and reducing the harm they cause to taxpayers and the wider economy.
New legislation enabling HMRC to name promoters, details of the way they promote tax avoidance, and schemes at the earliest point will help warn taxpayers of the risks involved in getting into tax avoidance and encourage those involved to get out of the avoidance.
The proposed new power to be included in the Finance Bill will enable HMRC to present a winding-up petition to the Court for companies who are operating against the public interest whether there is a debt or not.
The new HMRC power will mirror the approach that currently exists in the Insolvency Act 1986 by using any information acquired in connection with the Commissioners’ functions under section 5(1) of CRCA as a basis for considering winding-up action against a company.
This proposed power will allow HMRC to share information about promoters of tax avoidance and tax avoidance schemes earlier than it currently can or will be able to under the recently amended provisions in Finance Act 2021.
The proposed power would enable HMRC to name a particular scheme, its arrangements and how it is being made available to taxpayers or administered, from when HMRC first learns about it. The power will enable the naming of those associated with the entity carrying out the promoting activity by means of control or influence as well as any persons that carry out a role in selling the scheme to taxpayers.
The new power would also enable HMRC to publish any other information or documents relating to the arrangement, entities or individuals which HMRC reasonably believe will ensure that members of the public can identify the arrangements and understand them and the risks which attach to them.
The proposed changes would require HMRC to provide a 30-day period to those entities or individuals after HMRC have given them notice that they intend to name to allow them an opportunity to make representations as to why they should not be named. A final decision on whether to publish information would be made by an Authorised Officer.
Source: GOV.UK