Osborne hands HMRC £77m to hit tax avoiders
George Osborne will today close specific tax loopholes because he says it is “unacceptable” for people to “avoid paying their fair share, sometimes by breaking the law.”
In ramping up the rhetoric against tax avoidance, which is unlike the illegal practice of tax evasion, the chancellor said his Autumn Statement would tackle those who seek to avoid tax.
To that end, Mr Osborne yesterday handed £77million of new funding to HM Revenue & Customs, to allow the tax authority to widen its anti-avoidance – and anti-evasion – activities.
Those activities will have a focus on offshore evasion, and avoidance, by wealthy individuals and multinational companies, with the aim of raising £2bn in extra annual revenue by 2014.
They will also give “steps” to tax officials to “close the net” on the marketers of “aggressive” tax avoidance schemes, alongside sanctions for the “cowboy” advisers behind them.
New information disclosure rules and penalty powers will be introduced following consultation, “to make it more difficult for the marketers” of the schemes to promote them.
That feeds into another HMRC activity (in 2013) - strengthening the Disclosure of Tax Avoidance Schemes regime, meaning the range of schemes that need disclosing will expand.
Confirming the well-off are firmly in the taxman’s cross-hairs, 100 extra investigators will be deployed by HMRC’s Affluent Unit “to target avoidance and evasion by the wealthy.”
The stock of “specialist personal tax inspectors” will also increase, with a brief to tackle offshore evasion and avoidance of IHT via offshore trusts, banks accounts and other entities.
Continuing to lump avoidance in with evasion, HMRC estimated that its activities, spelt out in 'Closing in on Tax Evasion', against “avoidance, evasion and fraud” will raise £22bn a year.
The 2014/15 target seems reliant on the Revenue improving its use of “clever technology”, to the extent it “must become the market leader in the use of technology” to drive its business.
So an additional £30m will be invested in HMRC’s computer system Connect, already containing more than a billion records, so it can better detect people evading their obligations.
Addressing why now is the right time for HMRC to receive extra investment, not just for its IT, the taxman said it was down to taxpayer confidence, deterrent and the economy.
“Finding people who deliberately hide their income and wealth to evade their taxes is challenging,” reflected HMRC. “But doing it effectively has never been more important.
“It’s very important to the public’s confidence in HMRC that we explain...what we are doing to tackle those who break the law by evading their taxes. It’s also a message to those who evade that we are determined to detect and deal with them – the net is closing in.”
Danny Alexander, chief secretary to the Treasury, enforced: “In restoring the public finances, our first priority must be to tackle those who avoid or evade tax.
“It is simply not fair that at a time when most people are making a contribution to balancing the nation’s books, there is a small minority of taxpayers who try to escape their responsibility.”
Seeming to evidence that ministers have in mind multinationals recently exposed in the press for minimising their tax liabilities, the investment in HMRC includes more resources to challenge transfer pricing arrangements.
According to the Revenue, this “will help to ensure that multinationals do not shift profits out of the UK and therefore pay the tax due in accordance with UK tax law.”
But not ignoring smaller outfits who might try similar tax mitigation strategies, HMRC said its new funding would help tackle long-running avoidance schemes and cases, including those involving partnership losses.
Mr Osborne endorsed the £77m injection, saying: “The government is clear that while most taxpayers are doing their bit to help us balance the books, it is unacceptable for a minority to avoid paying their fair share, sometimes by breaking the law.”