HM Revenue & Customs (HMRC) is seemingly more open to reach means-based settlements with investors involved in tax avoidance arrangements on any liability due, according to law firm Stewarts.
The UK taxman previously had a very rigid approach to reaching settlements, where it believed the tax planning did not work or had been successfully challenged in the courts.
This would then require investors to enter into a settlement for the full unpaid sum and accrued interests.
But this approach proved “insurmountable for many investors” who could not afford to pay in full, the firm said.
‘A fresh view’
Lisa Vanderheide and Sara Stenton, directors within the tax investigation team at law firm Stewarts, said: “We are in contact with senior personnel in HMRC’s counter avoidance directorate, who have advised us that HMRC now recognises that many investors avoid entering into a dialogue with HMRC about the settlement of their tax avoidance arrangements.
“This is because they believe it is unlikely they would ever be able to meet the full tax and interest liability, even if it were spread out over a period of time under a payment arrangement acceptable to HMRC.
“To address this issue, HMRC is taking a fresh view. As a way of encouraging investors to come forward, HMRC is willing to discuss means-based settlements. A new team within HMRC is handling cases under this new approach, led by experienced senior investigators. We have already had several clients accepted into the team, and we are discussing settlement under the new approach.
“We believe there is now a significant opportunity for investors in various tax avoidance arrangements to negotiate a settlement with HMRC. This settlement may involve the payment of less than they strictly owe.”
A spokesperson for HMRC, however, told International Adviser that the taxman’s approach has not changed whatsoever as it is the same one it applied to debt.
“HMRC will support any taxpayer that may struggle to pay their outstanding tax liabilities and would urge them to contact us as soon as possible. They may be eligible to receive support with their tax affairs through a manageable payment plan. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.”
