At an event held by leading think tank Policy Exchange this morning, exchequer secretary to the Treasury David Gauke, said the government plans to strengthen the Disclosure of Tax Avoidance Schemes rules to make them a “more effective weapon in the battle against tax avoidance”.
One of the ways it plans to do this is by giving HM Revenue & Customs stronger powers to force promoters to tell them about avoidance schemes “and who is using them”, as well as making it easier to impose penalties for failure to provide information to HMRC about a scheme.
Also included in the proposals, on which the government is looking to the tax industry for consultation, are plans to publish warnings about tax avoidance schemes which it believes are being mis-sold and to make it easier for taxpayers to identify when they are on the receiving end of a hard sell by a less reputable promoter.
“We are building on the work we have already done to make life difficult for those who artificially and aggressively reduce their tax bill,” said Gauke.
“These schemes damage our ability to fund public services and provide support to those who need it. They harm businesses by distorting competition. They damage public confidence. And they undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride.”
Today’s announcement comes in the wake of revelations last month that a number of high profile people, including comedian Jimmy Carr, have been using highly aggressive tax avoidance schemes.
The scheme Carr was caught using was a Jersey-based scheme called K2, which it was alleged could reduce someone’s income tax bill to as little as 1%. Roy Lyness from Peak Performance Accountants, was accused of promoting the scheme and if today’s proposals are accepted, HMRC will have the power to “name and shame” the likes of both Carr and Lyness in a bid to dissuade and assist the public into not choosing to use aggressive schemes.
“The Disclosure of Tax Avoidance Schemes regime (DOTAS) has assisted HMRC greatly over the years, closing off around £12.5bn in avoidance opportunities,” added Gauke.
“But as the avoidance landscape changes, so must it. The major reforms to the system we consult on today can, informed by responses, place DOTAS once again at the forefront of anti avoidance measures globally.”
