View more on these topics

HMRC winning majority of tax avoidance cases

One of the three cases lost by HMRC concerned Investec

HM Revenue & Customs lost just three of the 26 tax avoidance cases heard in 2016/17, data from the Government department shows.

A list of litigation decisions that involved tax avoidance on the HMRC website shows that there was also one mixed decision – concerning brewer Greene King – where the outcome was found partially in favour of HMRC.

The three cases it lost concerned Investec, Project Blue, which is a subsidiary of property developer Qatari Diar, and the individuals Salinger and Kirby.

In August last year, HMRC published a consultation paper on strengthening tax avoidance penalties and deterrents. It included IFAs within its proposed definition of a tax avoidance “enabler” because it says they can benefit through fees and commissions by marketing avoidance schemes.

The paper discussed penalties for enablers of tax avoidance schemes, with HMRC favouring a model where a penalty of either 100 per cent of the tax evaded, or £3,000, whichever is higher.

Danby Bloch: Tax avoidance trends advisers need to know about

Commenting on the latest HMRC data, partner at law firm Pinsent Masons Heather Self says: “Anyone seeking to implement a complex tax avoidance scheme would have to be a confirmed optimist to assume they would win if the case is ultimately litigated.”

She adds: “However, it is worth mentioning that HMRC saw a slight increase in the proportion of cases it lost last year – although, admittedly this was on a low base.”

Self says the corporation tax cases mainly relate to complex financing transactions. Subsequent legislation means it is unlikely such schemes would be implemented now.

Meanwhile, the income tax cases tend to relate to questions around whether an entity was trading, or whether PAYE or NICs should apply to specific arrangements.

Self says: “Overall, it has to be said that the volume is not high, which suggests that politicians’ regular promises to collect billions more from ‘stamping out avoidance’ are unlikely to collect as much as they would think.”

Recommended

Directors behind tax avoidance scheme banned

Two people behind a firm marketing a tax avoidance scheme have been banned from acting as directors. Timothy Richard Edmunds and Annette Edmunds were directors of ESP Strategies Ltd. An Insolvency Service investigation found that, before the firm fell into liquidation, it had moved assets out of the reach of creditors by using a tax […]

Tax-Corporate-Calculator-Business-Finance-700x450.jpg
5

IFA tax avoidance penalties confusion as Govt draws blank on new rules

The impact of new Government rules that could class some financial advisers as tax avoidance “enablers” remains unclear after HM Revenue & Customs has been unable to provide estimates over the penalties it expects to levy. The Government confirmed in December after consultation that it planned to push ahead with new penalties for those who […]

Globe-Global-World-Map-700x450.jpg

Wealth managers face $1trn outflows over tax avoidance rules

Wealth managers could lose $1.1trn (£850bn) in client money over the coming years on the back of a global crackdown on tax avoidance through the use of offshore accounts. A report by Oliver Wyman and Deutsche Bank suggests that the wealth manager arms of banks will be lumbered with additional costs as a result of […]

1

HMRC reaffirms support for tax avoidance scheme measures

HM Revenue & Customs has reaffirmed its commitment to using accelerated payment notices to combat tax avoidance schemes as it releases updated guidance on how it intends to use the penalties. Accelerated penalty notices order individuals to pay disputed tax amounts upfront before HMRC issues court challenges over contested tax avoidance schemes. HMRC re-released its factsheet […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. In para 5, do they mean avoided or evaded. This distinction is rather important.

    • The line between the two seems to becoming increasingly blurred. What, just a few years ago, might have been a legitimate avoidance scheme that involved some bending or stretching of the rules (sometimes both), HMRC are now looking upon as attempted evasion. Hence the number of cases being battled out in court.

Leave a comment