In proposals issued last Friday, the Government body issued details of its plans to introduce additional financial costs such as a surcharge and additional reporting requirements on serial avoiders.
It defined a serial avoider as someone who “uses multiple avoidance schemes at the same time, whether using the same avoidance scheme in more than one year, or using different avoidance schemes, to avoid significant amounts of tax”.
As part of its plans, it has set up the Serial Avoiders Unit, which will identify and tackle users of multiple avoidance schemes.
The unit will offer a hotline service to help people who have used multiple schemes and want to get their tax affairs in order.
The consultation also considered the introduction of additional penalties for cases where the General Anti-Abuse Rule (GAAR) applies.
GAAR is a list of tax arrangements considered abusive by the Revenue in relation to income tax, corporation tax, capital gains tax, inheritance tax, petroleum revenue tax, stamp duty land tax, and annual tax on enveloped dwellings.
Clear message
Financial secretary to the Treasury, David Gauke, said: “Today, we are proposing further action, such as penalties, to tackle the small hard-core group of people who repeatedly use avoidance schemes.
“Our message is clear: It is time to get out of avoidance and start paying your fair share.”
Frank Strachan, partner, tax at Edwin Coe, said the Revenue’s additional measures are ill-judged in the context of its recent introduction of Accelerated Payment Notices.
“Has HMRC not already sufficient tools in the kitbag to challenge avoidance users without the requirements of further sanctions?” he said. “I see the logic of targeting serial uses of avoidance schemes because they would represent higher risk taxpayers, but some of the rhetoric used by Government ministers included in HMRC’s briefing is playing to an audience.
“In my view, HMRC should focus more heavily on sanctions for those who promoted, and in some cases continue to promote, the more aggressive avoidance schemes, rather than the end user.”
Martin Taylor, head of client relations at Rebus, added: “HMRC have sent out over 3000 notices by 9 January 2015 totalling just over £1bn. This suggests their £7.1bn may be under estimated or they have targeted higher value APNs first.”
Friday’s consultation comes after chancellor George Osborne announced in December that the UK Government would consult on potential sanctions for repeat users of known avoidance schemes.
This came after the Government body received Royal Asset in July last year to begin issuing Accelerated Payment Notices (APNs) and Follower Notices to users of tax avoidance schemes.
It September, it began issuing its first APNs. It hopes to issue a total of 43,000 notices, with 33,000 going to individuals and 10,000 to business. They are expected to cover £7.1bn in disputed tax
