HMRC’s ‘Counter Avoidance Directorate’ was established by the government in 2014, with the intention of catching those who actively avoid paying income tax. Their work recouped £494 million during the 2014-15 tax year. This rose by an astonishing 80%, to £886 million, in 2015-16; as reported in The Telegraph on 21/12/16.
This information was obtained through a freedom of information request made by legal firm Pinsent Masons and one of their tax directors, Paul Noble, points to one of the main contributing factors of its success: “This is part of crackdown as the Government tries to make it harder to avoid tax, and is the result of various new tools that they have started to use, one of which is the accelerated payment notice.”
£3 Billion repaid
£3 billion has been paid back to HMRC after 60,000 accelerated payment notices had been sent. This new power, which demands payment of tax debt in 90 days, has been considered controversial and 3,000 were retracted by the tax authority.
Eclipse 35 scheme
The work of the Counter Avoidance Directorate has focused on financial schemes that are designed to help taxpayers deliberately avoid paying income tax. It hit the headlines when many celebrities who participated in the Eclipse 35 scheme were prosecuted. This particular scheme involved film production and cost most of the participants a substantial amount more than they first invested.
As an HMRC spokesperson clarifies, “Avoidance schemes are often highly contrived and almost invariably fall flat when trying to deliver a tax advantage never intended by Parliament. The fact is the majority of schemes simply don’t work and can put avoidance users in a significantly worse financial position than if they had never used the scheme in the first place.”
What’s next?
Many battles have been won against those who try and avoid paying their fair share – but the war continues. New weaponry for HMRC was announced during Chancellor Hammond’s Autumn Statement. In part, this turns the spotlight on those tax advisers and accountants who actively encourage their clients onto these schemes, with more extreme consequences. The package of proposed new anti-avoidance powers is estimated to rake in a further £2billion for the Treasury.
