It emerged recently that the H M Revenue and Customs (HMRC) is sending letters directly to around 1,500 people who have signed up to a particular tax avoidance scheme.\u00a0 Although the scheme has still to be legally challenged the HMRC is getting its retaliation in first and giving tax payers the opportunity to get out of the unnamed scheme before such a challenge.<\/p>\n
As an accountant I have mixed feelings around tax avoidance schemes.\u00a0 Whilst everyone should have the right to organise their affairs as they see fit the use of schemes is fraught with danger.\u00a0 Anyone using a scheme needs to do so with their eyes wide open and understand that the HMRC will almost certainly look to challenge the scheme.<\/p>\n
The role of the HMRC is to make sure that schemes do not stray from tax avoidance to tax evasion and I fully support their right to vigorously investigate any scheme.\u00a0 Historically the HMRC have investigated schemes by contacting the promoters of the scheme rather than the individual investors to tell them they will be challenging the scheme.\u00a0 I suspect that by contacting the investors directly the HMRC are hoping to scare or bully some investors into withdrawing from the scheme and I do have concerns over the use of such tactics.<\/p>\n
Apparently one version of the letters says \u201cYou are in a small minority of people who have made the deliberate choice to avoid taxes.\u00a0 We focus our resources on this small minority.\u00a0 The choice you have made changes the way we view your tax affairs.\u201d\u00a0 Clearly the implication is that not only will the HMRC enquire into the investment in the scheme but that by remaining in the scheme you are almost guaranteed to be the subject of a detailed enquiry.\u00a0 Another extract explains how the HMRC are happy to use the courts and to challenge tax avoidances and that if they do this, there will be years of uncertainty about your tax affairs.\u00a0 Whilst this is undoubtedly true and users of these schemes need to be aware of this, I do not feel it is the role of HMRC to warn investors about this.<\/p>\n
In order to justify using a tax avoidance scheme it is likely that the investors are reasonably financially sophisticated or will pay advisers to be sophisticated on their behalf so I would not expect these threats to be taken too seriously and would not expect significant numbers to withdraw from the scheme.\u00a0 It does however beg the question where will this tactic stop.\u00a0 If it is subsequently shown that some people were bullied by the HMRC into withdrawing from a perfectly legal scheme then clearly this would be an unacceptable abuse of power.\u00a0 Additionally if this tactic is used more frequently in the future it will increase the chances of unnecessary stress being caused to innocent individuals.<\/p>\n","protected":false},"excerpt":{"rendered":"
It emerged recently that the H M Revenue and Customs (HMRC) is sending letters directly to around 1,500 people who have signed up to a particular tax avoidance scheme.\u00a0 Although … Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":21592,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[13],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/barnesroffe.com\/wp-json\/wp\/v2\/posts\/1458"}],"collection":[{"href":"https:\/\/barnesroffe.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/barnesroffe.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/barnesroffe.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/barnesroffe.com\/wp-json\/wp\/v2\/comments?post=1458"}],"version-history":[{"count":0,"href":"https:\/\/barnesroffe.com\/wp-json\/wp\/v2\/posts\/1458\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/barnesroffe.com\/wp-json\/wp\/v2\/media\/21592"}],"wp:attachment":[{"href":"https:\/\/barnesroffe.com\/wp-json\/wp\/v2\/media?parent=1458"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/barnesroffe.com\/wp-json\/wp\/v2\/categories?post=1458"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/barnesroffe.com\/wp-json\/wp\/v2\/tags?post=1458"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}