It used to be one of the UK’s growth industries but now the tax avoidance industry may be in its twilight years because of new laws and greater powers for HMRC.
The landscape is looking bleak for specialists. But leading figures within the profession fear the fallout from their schemes could rebound on many non-specialist advisers as disgruntled clients seek redress for being lured into schemes that went wrong.
In the March Budget, Chancellor George Osborne said taxpayers will have to pay upfront if their tax avoidance scheme has been registered under the Disclosure of Tax Avoidance Schemes (DOTAS) introduced in 2004. Individuals and businesses using avoidance schemes that fall under the General Anti-Abuse Rule (GAAR), introduced in July 2013, will also have to pay their tax upfront.
HMRC estimated that the tax change will raise £340m in 2014-15, £1.2bn in 2015-16 and £1.3bn in 2016-17. The requirement to pay upfront is backdated to 2004 when DOTAS began.
HMRC will send “accelerated payment” notices to approximately 33,000 individual taxpayers for £5.1bn of tax under dispute and to around 10,000 companies for corporates for £2.1bn of tax under dispute.
The change will force people to pay tax debts immediately once avoidance schemes have been found illegal.
Previously individuals could delay paying tax until after the end of legal appeals.
Of course, taxpayers can still challenge HMRC by taking the case to a tax tribunal.
The changes will “kill any tax avoidance schemes that are still limping on,” says Simon McKie...