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View the article online at http://citywire.co.uk/wealth-manager/article/a762394

What will come onto HMRC's radar next?

by Danielle Levy on Jul 18, 2014 at 10:22

He warns of more significant repercussions for some investors in schemes, with criminal investigations a possibility.

‘People need to think long and hard. A scheme does not guarantee you success and there could be possible sanctions on them afterwards,’ Watt added.

Andrew Watters, director and tax specialist at law firm Thomas Eggar, suggests the more artificial a scheme feels, the less likely it is to succeed.

While many expect HMRC to take further action against employer benefit trust schemes, which seek to minimise the income tax and National Insurance charge on employee remuneration, Watters notes this trend could speed up as schemes held outside of the UK will become more visible to domestic tax authorities.

This is the case after the so-called ‘son of Fatca’ tax information exchange agreements signed between the UK and Jersey, Guernsey, the Isle of Man, and Gibraltar. Additional agreements have been signed with other jurisdictions.

‘Financial institutions in these jurisdictions are now under obligation to provide details of individuals who are UK residents who have relevant information,’ Watters said.

Against this backdrop, he notes a likely return to best practice when it comes to tax planning. ‘If you are going to enter into some form of tax planning, it is better to make sure it works when your cards are on the table.’

George Bull, senior tax partner at Baker Tilly, believes recent legal victories and the expansion of HMRC’s powers suggest it is ‘winning a game that for many years has been against them’.

Looking ahead, he expects the information gained from intergovernmental agreements to add a new dynamic. However, he anticipates HMRC will be cautious in the way it uses its new powers in order to avoid diminishing public confidence.

‘They are taking a hard line on avoidance but must also be careful in the way they use direct access to bank account powers,’ he said.

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