HMRC to clamp down on tax avoidance

HM Revenue & Customs (HMRC) is set to clamp down on tax avoidance, after stating that it is “doubling the resources” to tackle those in the avoidance supply chain.

The supply chain can include financial advisers, accountants and avoidance scheme promoters and designers.

Penny Ciniewicz, HMRC’s Director General of Customer Compliance, said: “We have more than 100 current investigations into promoters and we’re keeping a very close eye on the market for avoidance.

“We are spotting schemes as they emerge and we’re tackling them.”

Ciniewicz was responding to questions from a Treasury select committee, with a focus on HMRC’s loan charge. The loan charge policy is subject to an independent review after it came into effect on 6 April 2019, applying to those who use disguised remuneration schemes.

The new legislation added a 45 per cent charge on all loans that are advanced through the schemes, which is non-refundable. If the individual had agreed with HMRC to settle their tax matters previously, then the charge will not be added, but the charges levied can date back as far as 20 years.

Some have expressed concern that many of the 50,000 individuals involved in the issue are low-paid workers that joined schemes on the advice of employers, and who now face bankruptcy.

At the time of the schemes being set up, HMRC did not query their legitimacy, with pressure being put on the loan charge by MPs, taxpayers and campaigners.

HMRC has said that they are monitoring PAYE and real-time information that may indicate that individuals are becoming involved in tax avoidance, while also writing to people to “nudge them away from avoidance if we think they might be getting into that space.”