The recent UK Autumn Budget 2021 has seen a dramatic beefing up of the powers available to HMRC to investigate and penalise tax arrangements put in place by, what it regards as, tax avoidance scheme promoters. This STEP article outlines the slew of new measures that allow HMRC to freeze the assets of the relevant promoter, impose significant financial penalties and even wind up the companies involved.
Of most concern to any taxpayers utilising such schemes will be the public scrutiny that HMRC publishing information with only 30 days' notice could bring upon them. These new significant steps will no doubt further reduce the appeal of such aggressive planning. Indeed, HMRC's new Taxpayer Protection Taskforce will no doubt have a focused remit on investigating the tax affairs of those who have chosen to utilise such schemes.
At the same time, it must be borne in mind that a number of high profile figures, including well-known celebrities, state they were not advised properly when being recommended to enter into such planning and are actively suing their advisors for, they allege, pushing them into such schemes without properly explaining the risks involved. It would certainly seem that the companies and individuals still actively promoting such schemes will struggle to avoid severe sanction under this new legislation and that their days may well be numbered.
Finance Bill 2021-22 will contain further measures to clamp down on promoters of tax avoidance. They will allow HMRC to freeze a promoter's assets to ensure payment of penalties, even if there is no enforceable debt; impose penalties of up to 100 per cent on UK entities that are fronts or facilitators of schemes run by offshore promoters, where existing penalties are more than GBP100,000; and apply for winding-up orders against companies and partnerships that promote tax avoidance schemes. HMRC will also be able to publish more information on promoters and their schemes, with only 30 days given to the promoters, so as to deter taxpayers from using them.