Countering Tax Avoidance and Evasion

George Osborne, the Chancellor of the Exchequer, presented his annual Spring Budget in a buoyant and determined mood. Opening with the background – setting comments that the country is on course to achieve a Budget surplus during the latter years of the current Government, he will continue to guide the Economy towards a more stable fiscal environment, notwithstanding the revised downward economic growth forecasts. A core part of the cash – raising efforts will continue to focus on existing measures aimed at countering tax avoidance and evasion. Whilst all the major political parties support the initiative it has been said that Tory Governments have had more success than their predecessors. Accelerated Penalty Notices (APNs), naming and shaming and shutting down the tax avoidance industry have been effective in this battle and it is clear that this will continue.

An estimated £8bn was expected to be reclaimed from taxpayers intentionally avoiding tax. Further reforms were aimed to raise another £5bn. Today the Chancellor announced that £12bn is to be raised under this initiative. Lowering his targets by £1bn! Was he over–optimistic as to the results of this drive?

A series of actions are designed to continue to tackle tax avoidance and evasion, including moves to end the use of “personal service companies” by public sector employees. No other details we given in the Speech, but if what has happened recently is anything to go by, HMRC will press ahead with issuing thousands of further APNs  and it will only be a matter of timing until Courts are considered to enforce the collection of outstanding tax.

HMRC has not taken a heavy handed approach thus far, possibly more focussed on collecting monies and reaching settlements, whilst getting their ducks in a row. But we recognise that this will remain at the top of their agenda for the next few years. Make no mistake, the Chancellor is focused on attacking what he calls “disguised remuneration schemes”. The need to plan ahead, given the powers and resources that HMRC have at their disposal, should make this a priority for small businesses and their owners who find themselves caught up in the accelerate payment regime.

Whilst clearly unthinkable per Mr Osborne, a fundamental assumption underlying all of the forecasts’ is that the UK remains within the EU. Were Brexit to happen, will all of this go out of the window? Why would it?!