HMRC plans to increase up-front payments from tax avoiders


The number of tax avoiders forced to pay tax owed upfront could increase if a new set of government plans are approved.

HM Revenue and Customs (HMRC) has launched a consultation on proposals to change economic incentives for contractors that avoid paying levies. The government is looking to add further circumstances to the law in which HMRC will be able to ask for upfront payment from those using tax avoidance schemes. This comes after chancellor George Osborne announced in the Autumn Statement that the tax body would be able to demand instant payment of tax from those using an avoidance scheme the same as or similar to one defeated in court following an HMRC investigation.

Under the new proposals, any disputed tax associated with schemes that are subject to the Disclosure of Tax Avoidance Schemes regime will be eligible for immediate payment. Similarly, contractors and self-employed professionals employing the most abusive tax avoidance measures will also be demanded to settle upfront by HMRC. The government claims that by building in such circumstances to existing regulation, the tactic of holding onto the disputed tax while a case is being investigated and litigated will be eradicated.

David Gauke, exchequer secretary to the Treasury, said: "The government has been absolutely clear that we will not tolerate aggressive tax avoidance and will take action to make sure people pay the taxes that are due. While the vast majority of taxpayers play by the rules, there is still a minority who will engage in artificial schemes as a way to avoid their responsibilities."

Mr Gauke added that the scheme isn't just designed to remove the advantage enjoyed by those that avoid tax, but to deter anyone thinking of not complying with HMRC rules and regulations. By doing so, the government is hoping to shift the economic balance and help HMRC resolve many of the cases currently under investigation. However, the tax body claims that the new proposals are only an extension of the terms and conditions taxpayers might currently have to accept when deciding to use an avoidance scheme.

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