Treasury all set to expose tax avoiders under new crackdown

Written on:July 23, 2023
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Treasury proposing that new powers for HMRC “to demand more information from scheme promoters” (Image courtesy: HM Revenue)

In the wake of the brawl over the tax affairs of Jimmy Carr, Her Majesty’s Revenue and Customs (HMRC) will today announce a crackdown on tax avoidance schemes, under which those who try to use complex schemes to avoid tax could have their names disclosed to the tax inspectors by their accountants.

Of all the unpaid tax income, 14% is due to aggressive avoidance schemes, estimates Treasury minister David Gauke. According to HMRC, individual tax avoidance costs the economy £4.5 billion out of £7 billion every year. To tackle the promoters of “contrived” tax schemes, hence, Treasury is proposing new powers for HM Revenue and Customs “to demand more information from scheme promoters”.

The consultation published today allows government to demand information about the financial loopholes used by the rich to legally sidestep large tax bills. David Gauke will tell the Policy Exchange think tank that under the new plan, companies which fail to disclose their tax-avoidance schemes will not only be fined, but could also be “named and shamed”.

Besides, individuals behind the tax-avoidance scheme will be forced to take personal liability for promoting them. Treasury is also considering new measures to extend current rules on the mis-selling of financials services products to cover the sale of tax avoidance schemes “that patently do not deliver the advertised results”.

Last month, the comedian Jimmy Carr was criticised of using a legal scheme, named K2, which allowed him to pay income tax of as little as 1%. 39-year-old Carr reportedly used the scheme to shelter £3.3 million a year, by channelling the money from DVD sales and television appearances into a company that gave him back “loans”, which are not subject to tax.

Of the scheme’s 1,000 members, who were keeping £168 million offshore between them, Jimmy Carr is thought to be the biggest single beneficiary. Carr later apologised and confirmed making a “terrible error of judgment” in using a tax avoidance scheme.

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