The government is introducing new rules for users and promoters of failed avoidance schemes, as new figures show that HMRC is winning 80% of avoidance cases heard in court.
The new requirements for users of failed avoidance schemes oblige them to settle the dispute where the avoidance scheme they are using has been defeated in another party’s litigation through the Courts, with penalties attached for non-compliance.
Likewise, obligations and sanctions will be increased for those deemed 'high-risk promoters' of such schemes. In light of this, criteria will be established for identifying and publishing the names of high‑risk promoters, seeking more information from them and applying penalties where there is failure to comply. Their clients will also be required to identify themselves to HMRC, the Autumn Statement noted.
The government will also introduce a new power that requires taxpayers who are using avoidance schemes that have been defeated in court to pay tax due to HMRC upfront. The government said this will provide HMRC with an additional tool to address a legacy stock of an estimated 65,000 avoidance cases, around 85% of which date back to before 2010.
'It will remove the cash advantage of sitting and waiting during an avoidance dispute, with the government forecasting that it could bring in
£700 million in extra revenue,' the statement noted.
There are also plans afoot to consult on the scope for extending this power by widening the criteria for which taxpayers are required to pay any disputed tax upfront.
The new requirements are announced as the government said disclosures of tax avoidance schemes fell by almost 50% between 2011-12 and 2012-13, with estimates that this number will continue to fall, with only 17 schemes disclosed in the 6 months to September.
The Autumn Statement announced the government's intention to increase the contribution of the richest by a further £3.5 billion over the forecast period through measures to tackle tax avoidance. These include preventing high-earning non-domiciled employees from avoiding tax by artificially splitting single employments to shift some of their employment income offshore and out of scope of UK tax.