Autumn Budget 2021 at a glance | AccountingWEB
The government has been consulting for some time on how to combat mass-market tax avoidance schemes; the Finance Bill 2021-22 will contain four measures which are intended to make life difficult or impossible for organisations to promote these schemes.
1. Freezing Orders
Under current law, HMRC can only apply for a freezing order on a company’s assets once there is an “existing cause of action” (such as an enforceable debt), by which time it may be too late to be effective. The new provisions will, for example, enable a freezing order to be sought at the same time as the initial application to the tribunal for a DOTAS penalty – thus denying scheme promoters any opportunity to frustrate the penalties by removing or concealing proceeds.
2. Offshore promoters
Additional powers are to be granted enabling a penalty of up to 100% of proceeds to be levied against UK entities fronting or facilitating avoidance schemes on behalf of a non-resident promoter (per paragraph 3, Schedule 33A of FA2014 as amended by FA2021). This would only apply where existing penalties (under DOTAS, POTAS or DASVOIT) exceed £100,000.
3.Winding-up
New provisions will enable a winding-up application to be made by HMRC on the ground that a company or partnership is “operating against the public interest” by operating tax avoidance schemes, but the final decision whether to wind up will still remain with the Court.
4. Naming and shaming
New provisions will allow HMRC to publish information about schemes and their promoters at a very early stage – as little as 30 days’ notice could be given to the promoters – in the hope that taxpayers might appreciate the risks of investing and be deterred from doing so.
This is potentially a very powerful tool. Prospective customers often join schemes because they are persuaded that they are uncontroversial and unlikely to face any serious HMRC opposition. Clear and early evidence of HMRC antagonism may well cause “cold feet” in such customers.
The government has been consulting for some time on how to combat mass-market tax avoidance schemes; the Finance Bill 2021-22 will contain four measures which are intended to make life difficult or impossible for organisations to promote these schemes.
1. Freezing Orders
Under current law, HMRC can only apply for a freezing order on a company’s assets once there is an “existing cause of action” (such as an enforceable debt), by which time it may be too late to be effective. The new provisions will, for example, enable a freezing order to be sought at the same time as the initial application to the tribunal for a DOTAS penalty – thus denying scheme promoters any opportunity to frustrate the penalties by removing or concealing proceeds.
2. Offshore promoters
Additional powers are to be granted enabling a penalty of up to 100% of proceeds to be levied against UK entities fronting or facilitating avoidance schemes on behalf of a non-resident promoter (per paragraph 3, Schedule 33A of FA2014 as amended by FA2021). This would only apply where existing penalties (under DOTAS, POTAS or DASVOIT) exceed £100,000.
3.Winding-up
New provisions will enable a winding-up application to be made by HMRC on the ground that a company or partnership is “operating against the public interest” by operating tax avoidance schemes, but the final decision whether to wind up will still remain with the Court.
4. Naming and shaming
New provisions will allow HMRC to publish information about schemes and their promoters at a very early stage – as little as 30 days’ notice could be given to the promoters – in the hope that taxpayers might appreciate the risks of investing and be deterred from doing so.
This is potentially a very powerful tool. Prospective customers often join schemes because they are persuaded that they are uncontroversial and unlikely to face any serious HMRC opposition. Clear and early evidence of HMRC antagonism may well cause “cold feet” in such customers.
Comment