On Friday 22nd September, HM Revenue & Customs hosted a webinar for tax agents covering the tax avoidance cycle and how to get out of it using HMRC’s Counter-Avoidance Multiple-Exits Team.

The Tax Avoidance Cycle

HMRC noted that tax avoidance schemes tend to involve bending the rules of the tax system, incorporating contrived features and operating within the letter (but not the spirit) of the law. If the scheme doesn’t work, an individual’s tax return will be incorrect and penalties will apply.

They noted that the three warning signs of a tax avoidance scheme include: –

1. It sounds too good to be true;

2. Payment tends to be made in the form of loans; and

3. It may feature disproportionate benefits in terms of the tax saved vs the amount paid to establish the scheme.

The HMRC Investigation

HMRC are likely to open an enquiry where an individual submits an incomplete tax return, a return with little or no information, or where the individual claims a relief that HMRC doubts is due.

They also noted that HMRC wins 8 out of 10 cases where an individual takes them court in connection with a tax avoidance scheme (please see our recent discussion of HMRC’s Supreme Court victory in connection with the Rangers case).

What are the benefits of settling?

• Early contact with HMRC may result in you paying less tax;

• You can return to concentrating on the running of your business;

• All liabilities may be brought together in one settlement; and

• HMRC will consider requests for payment of liabilities over time in cases where there is genuine hardship.

How can Pett Franklin help?

Pett, Franklin & Co. LLP are experienced in negotiating settlements with HMRC and we look to achieve the best possible outcome for taxpayers while bringing matters to a clear and final conclusion on all sides.

We are also able to provide practical guidance for taxpayers concerned about their tax affairs.

To find out more about how we can help you, please contact Stephen Woodhouse on 0121 348 7878.