According to a report by TaxWatch, fewer than five investigations into disguised remuneration tax avoidance schemes resulted in a criminal charge since April 2017. Shockingly, that’s less than one scheme promoter every year! And this is despite the fact that HMRC’s own figures that ‘marketed tax avoidance schemes’ account for one third of the UK’s annual tax loss.
Despite their appalling record, HMRC have give the impression that they actively pursuing scheme promoters, for example:
- When answering a parliamentary question in January 2021, then Financial Secretary to the Treasury Jesse Norman MP confirmed: “The Government and HM Revenue and Customs (HMRC) are committed to continuing to tackle promoters and operators of tax avoidance schemes. This includes challenging the entities and individuals who promote disguised remuneration loan schemes.”
- In it’s official response to the independent loan charge review, published December 2019, it was confirmed that “the Government and HMRC are determined to continue to tackle promoters of tax avoidance schemes”. Using the word ‘continue’ suggests that there has already been work undertaken to tackle promoters.
- In October 2019 Penny Ciniewicz, Director General of Customer Compliance at HMRC, told the Treasury Select Committee that: “We have more than 100 current investigations into promoters, and we’re keeping a very close eye on the market for avoidance. We are spotting schemes as they emerge and we’re tackling them.”
Won’t the recent budget proposals deal with scheme promoters?
Not according to TaxWatch. They say that the idea of speeding up the disqualification of directors of companies involved in promoting tax avoidance is unlikely to be a game-changer because schemes can simply find others to front their companies. However the other budget proposal to prosecute those who refuse to stop promoting schemes is more promising – especially if it contains strong sanctions including imprisonment. But TaxWatch remain concerned because even if the new law is proposed, it is unlikely to be applied at scale anytime soon.
Both the budget proposals are being consulted on, you can read HMRC’s proposals here.
We will be submitting a robust response to HMRC as it is imperative that strong action be taken against scheme promoters. The government must not continue turning a blind eye to the disaster that these crooked schemes have left in their wake. These schemes ruin lives, promising the world to vulnerable workers who are left with life-changing tax bills down the line.