HMRC is winning its battles against complex tax avoidance schemes…and it needs to.
The many pages of Treasury documentation issued in the wake of last month’s Autumn Statement included a ‘Scorecard’ listing the revenue impact of the Chancellor’s actions. Of the 59 items listed, 13 fell under the heading of “Avoidance, tax planning and fairness”, while another seven were captured by the grouping of “Fraud, error and debt”. Together the 20 measures listed are meant to raise an extra £1,515m for the Exchequer in 2014/15 and nearly £8,900m in total by the end of 2019/19.
That serves a reminder of the resources being given by HMRC to maximise taxpayer receipts. It is one of the inevitable consequences of a situation to where further tax increases have become politically difficult. According to recent information obtained from HMRC, in 2012/13 £20.7bn in extra revenue was raised as a result of ‘compliance work’, up to £2.1bn on the previous year and £2bn above its original target.
The Autumn Statement noted that since the Budget in March, the government had signed automatic tax information exchange agreements with the Isle of Man, Guernsey, Jersey, the Cayman Island, Gibraltar, Bermuda, Montserrat, the Turks and Caicos Islands and British Virgin Islands. In 2014 HMRC will start work to “to exploit the data generated” by the new agreements. There was also a promise in the Autumn Statement that “At Budget 2014 HMRC will consult on a range of enhanced sanctions to penalise those who hide their money offshore and enhance deterrence.”
The irony is that the success of the UK in securing information exchange agreements is down to the US’s imposition of FATCA (Foreign Account Tax Compliance Act). This US legislation has given the HMRC considerable leverage with the Crown Dependencies, as each needed UK government consent for FACTA to operate.
Warm island homes for hot money are becoming scarcer by the day….
The Financial Services Authority does not regulate tax advice.
30th January 2014