Tax Avoidance

HMRC wins £110m avoidance case

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Source: HMRC Press Release 14 October 2017

HM Revenue and Customs (HMRC) has won a landmark case against a tax avoidance scheme promoter that could lead to the recovery of £110 million.

The victory over scheme promoter, Root2, came after they failed to report a mass-marketed tax avoidance scheme, known as Alchemy, to the tax authority.

The First-tier Tribunal agreed with HMRC that the promoter did not abide by the DOTAS rules. There is no right of appeal against the Tribunal decision.

HMRC will seek to impose a substantial penalty on the promoter for failure to disclose the scheme.

HMRC does not approve tax avoidance schemes. Under DOTAS, promoters must notify HMRC of schemes that contain various hallmarks of tax avoidance. If a scheme has been notified under DOTAS, it does not in any way signify that it has been approved by HMRC.

DOTAS guidance can be found here.

HMRC Press Release here

 

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Educate your clients about tax avoidance to avoid HMRC’s crackdown

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Source: accountancy age.com, 29 September 2017

“It’s possible that some of your clients won’t have the first clue about tax avoidance or its implications. Some of them may have a little knowledge but be working on the assumption that it’s all legal and above board. Educating them on the tax avoidance basics is a priority.”

“Crucial points to share

  1. HMRC is getting tough – any scheme that claims to help businesses reduce their tax liability is subject to investigation.
  2. It can be hard to recognise a tax avoidance scheme, but the government advises people to be wary of schemes that sound too good to be true, those that offer seemingly huge benefits with very little cost to you, and anything that offers payment in the form of a loan that you won’t be asked to pay back. Any scheme that requires moving money out of the country should definitely set those alarm bells ringing.
  3. Clients may come across promoters who claim that having a Scheme Reference Number (SRN) shows that they are HMRC approved. They aren’t, and a world of trouble is likely waiting for anyone who engages with such a scheme.
  4. Inform clients that responsibility lies with them. HMRC has made it clear that ignorance or misunderstanding are not going to be accepted as get-out-of-jail-free cards – whether you entered into a tax avoidance scheme by accident or with full knowledge, you’ll have to pay the price.”

Source article here

 

HMRC wins £35 million tax avoidance case against BNP Paribas

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Source: HMRC Press Release 9 September 2017

HM Revenue & Customs (HMRC) has won a tax avoidance case worth £35 million against global banking group BNP Paribas.

The win came after the bank tried to use a tax avoidance scheme to claim an exemption from tax by generating an artificial loss on the purchase and sale of dividends without disposing of the underlying shares – a process known as ‘dividend stripping’. Read the rest of this entry »

“HMRC probing Manchester United players over image rights”

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Source: accountancy age.com 4 September 2017

“HMRC is probing at least two Manchester United players over potential image rights tax dodging, as reported by the Daily Mail.

The tax avoidance allegedly occurred under an agreement in the 2014-2015 season, where clubs could pay up to a fifth of their footballers’ total pay packages to ‘image rights’ companies rather than as part of their salary, thereby allowing the footballers to avoid income tax and allowing clubs to avoid National Insurance contributions.”

“HMRC reiterated their commitment to cracking down on tax avoidance in the industry to the paper: “We are currently making enquiries into the tax affairs of 67 footballers, 39 football clubs and 13 agents concerning a range of issues, including image rights abuse and are looking into more than 100 footballers in relation to the use of tax avoidance schemes.””

Source article here