The subsequent documentation also made it clear that it would not just be the end user that the tax man is interested in, there are strong intentions that providers of artificial schemes or promoters of loophole arrangements will be stopped at source as both the supply and demand side is tackled.
After the Budget, the document outlined four key areas which will be targeted:
- offshore tax evasion;
- avoidance of employment taxes;
- tax avoidance schemes; and
- corporation tax.
All are clear statements of intent but the detail of how these might be achieved are open to consultation and clarification.
Tax avoidance schemes
The Government is taking further action to tackle tax avoidance schemes at provider level with a number of proposed measures to stop the supply and demand.
The UK’s ﬁrst General Anti-Abuse Rule was already well publicised and will be introduced in Finance Bill 2013 to provide a signiﬁcant new deterrent to abusive avoidance schemes and strengthen HMRC’s means of tackling them.
There will also be a consultation on new “naming and shaming” proposals alongside a range of targeted disclosure requirements and associated penalties.
Suppliers bidding for public sector contracts will be required to declare speciﬁed noncompliance with tax obligations, allowing Government departments to exclude bidders that have not been compliant.
And, in a move which is bound to be popular, a warning shot was fired to the large corporate to pay their fair share of tax and not engage in aggressive tax planning.
HMRC has already run one of its targeted campaigns aimed at people who have tax liabilities from overseas assets or accounts to come forward voluntarily. It has also indicated it will be strengthening ties with some offshore terrotries via agreements with the Channel Islands and the Isle of Man.
There has been indications in the past that the Government wanted to act against complex artificial schemes, some used by contractors, which derived tax benefits for their users by operating from offshore territories.
The Government has set out its approach in a separate offshore evasion strategy document from HMRC's new centre of excellence on offshore evasion.
Offshore employment intermediaries will also be clearly targeted, implying that those who use artificial schemes to reduce their liabilities will be under the spotlight.
- 1.210 Autumn Statement 2012 also announced that HMRC would review the use of offshore employment intermediaries. As a result of that review, the Government will strengthen obligations to ensure the correct income tax and NICs are paid by offshore employment intermediaries, with consultation on the details. As part of its ongoing compliance work, HMRC will continue to gather evidence about other forms of employment tax avoidance in order to inform future policy and operational decisions.
There will be further consultation on the taxation of partnerships, specifically with a view to removing the presumption of self employment within a partnership.
1.209 The misuse of the partnership rules has been a feature of many avoidance schemes closed down in recent years, and the Government announced on 5 December 2012 that HMRC would consider the taxation of partnerships. As a result of this work, the Government will consult on measures to:
- remove the presumption of self-employment for limited liability partnership (LLP) partners, to tackle the disguising of employment relationships through LLPs; and
- counter the artiﬁcial allocation of proﬁts to partners (in both LLPs and other partnerships) to achieve a tax advantage.
The Government intends to make it easier for HMRC to collect taxes owing. It says:
- 1.215 The Government announces that it will enable HMRC to increase the amount of tax debt collected via the Pay As You Earn system from individuals on higher incomes. The Government will consult on how this process will be designed. The Government will also introduce operational measures to increase HMRC’s efﬁciency in collecting tax debts and make it easier for people to pay off a tax debt.
Shout99 will be continuing its focused coverage with analysis from experts of the issues in the Budget (and the more important ones behind the Chancellor's words) in our Political News.
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Susie Hughes © Shout99 2013