Tax Avoidance: Tackling Marketed Avoidance Schemes
HC 788, Twenty-ninth Report of Session 2012-13 - Report, Together with Formal Minutes, Oral and Written Evidence
- House of Commons - Committee of Public Accounts
- TSO (The Stationery Office)
The report 'Tax Avoidance: Tackling Marketed Avoidance Schemes (HC 788)' examines the proliferation of contrived tax avoidance schemes which exploit loopholes in legislation and abuse available tax relief schemes.
HM Revenue and Customs (HMRC) estimate that in 2010-11 the tax gap due to avoidance was £5 billion and that the present total tax at risk from avoidance over time is £10.2 billion. Promoters and providers sign up as many clients as possible before HMRC changes the law and shuts the scheme; they then move on to a new scheme and repeat the process.
Those who promote a tax avoidance scheme are required to notify HMRC of the scheme, however HMRC does not know how much avoidance is not disclosed. It is alarming that some QCs' opinions are being used by promoters as a 'reasonable excuse' for non-disclosure which prevents HMRC from applying a penalty.
The complexity of tax law creates opportunities for avoidance, there is no effective deterrent and HMRC is ineffective in challenging promoters. All too often Government introduces tax incentives to stimulate economic activity that become an opportunity for tax avoidance. Promoters collect their fees even when the schemes are found not to deliver a tax advantage and few schemes are covered by mis-selling regulations.
HMRC could learn from how other countries deter and tackle tax avoidance. HMRC should also name and shame those who promote tax avoidance schemes to harness public opinion and reduce the appetite of companies to promote or use avoidance schemes.
|Format||Paperback||Published||19 Feb 2013|
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