A range of changes are proposed to address many of the issues relating to existing legislation, the aim being to ensure that HMRC can obtain relevant information at an earlier stage. The proposed changes would also enable HMRC to assess penalties at an earlier point when a multi-user scheme was shown not to work. • The General Anti-Abuse Rule (GAAR), which enables HMRC to take action in relation to both the promotion and use of abusive tax arrangements. This document deals in particular with the application of the GAAR to partnerships.
Changes to the GAAR procedure would ensure that all circumstances are catered for and reduce the risk of promoters looking to take advantage of any ambiguities in the current GAAR legislation.
A separate consultation aimed at tackling disguised remuneration schemes has also been published as well as a Call for Evidence, currently running on the subject of raising standards in the tax advice market.
As the tax avoidance market has moved away from bespoke avoidance schemes designed for the wealthy and towards mass-marketed schemes HMRC have an increasingly important role to play in informing taxpayers, in order to reduce the risk that they enter into schemes without necessarily understanding the repercussions.
A key part of tackling this problem is to address it at source and act swiftly and directly against promoters, which is what the measures in this consultation aim to do.
Promoters rarely tell their clients that the product they are offering is an avoidance scheme, and they do not explain the risks of entering the schemes they sell. Instead, promoters may promise implausibly low tax bills and give assurances that their arrangements cannot be successfully challenged by HMRC. However, individual taxpayers are legally responsible for getting their tax right and will eventually need to pay the additional tax they owe, often having already paid out substantial fees to the promoters they used.
To understand the full details of the proposals read the consultation paper which can be downloaded at gov.uk.
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Building a trusted, modern tax administration system 28 July 2020
At the March 2020 budget, the Chancellor of the Exchequer highlighted the fact that the government’s intention was to create ‘a tax system fit for the challenges and opportunities of the 21st century’.
The importance of this has been demonstrated by challenges incurred due to the COVID-19 pandemic. Although HMRC has overcome the challenges of implementing the employment support schemes currently in place, they have also had to deal with constraints imposed by a tax administration system that needs modernisation. Lessons can be learned from COVID-19 so that in the event of any future human or natural disasters, the government can offer support as efficiently as possible. HMRC is likely to evolve as an organisation as well as discharging their traditional role as a tax authority. Trust needs to be maintained by both the taxpayer and the wider public for this to be a success. The document produced by the government, sets out HMRC’s vison for the future of tax administration within the UK, which is designed to improve its resilience, effectiveness and, above all, support for taxpayers. It also has details of a long-term strategy of focused, collaborative and transparent improvements to the tax administration system which has the potential to generate huge benefits, both for individual taxpayers and businesses, and for the collective strength and resilience of the UK as a whole.
The document is broken down into six sections, which cover the following:
• •
A vision of resilience and effectiveness The core of a modern tax system
• The benefits: greater ease of use, productivity and resilience • The need for reform • A 10-year strategy -
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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