HMRC waits on £1.2bn from anti-avoidance package

A raft of new tax measures designed to raise £1.2billion by clamping down on evasion and avoidance has been flagged up by a freelance trade group.

Included in Finance Act 2018, the measures relate to new criminal offences on offshore income, assets, activities and tax responsibilities, pointed out the Freelancer & Contractor Services Association (FCSA).

So from next month, a closing of “loopholes” in existing anti-avoidance laws means “people will not be able to avoid paying UK tax on funds they withdraw from offshore trusts,” the government said.

Specifically, a new requirement for the self-employed in the scope of 2019’s disguised remuneration loan charge will force them to provide new details to HMRC about the loans.

The same requirement to disclose additional information to the Revenue is being introduced to cover not just the self-employed, but also to “employees” in scope of the loan charge.

The bill details what information must be provided, so that HMRC can “conduct compliance checks on the loan charge”; by what date, and the penalties per inaccuracy (up to £3,000).

How and when to launch an appeal is outlined too (within 30 days of penalty notice), as is what HMRC says will qualify as a ‘reasonable excuse’ -- which can prevent a penalty arising.

Also included in the anti-avoidance and evasion package:

• companies will be headed off from claiming relief for losses in the disposal of shares “which do not reflect losses incurred by the wider group.”
• companies will be stopped from claiming unfair tax relief on their intellectual property.
• online marketplaces will be forced to become more responsible for paying the unpaid VAT of people who sell on the platforms.

Mel Stride, financial secretary to the Treasury, welcomed the package as proof that the government is not ‘resting on its laurels,’ even though the ‘tax gap’ is already at a record-low.

“[The] changes show our determination to ensure the tax system remains fair for the honest majority of people and businesses who pay the taxes they owe,” he said.

But serving to underline the large amount of changes that the contractor sector has to keep up with, the newest guidance publication from the FCSA actually relates to the Criminal Finances Act -- of 2017.

So although it flagged up the new £1.2bn package this week, the umbrellas, accountants and agencies which FCSA advises are still navigating the previous round of offences, effective since September.

The government says it has now introduced over 100 anti-avoidance/evasion measures since 2010, “helping to secure and protect over £175 billion in tax that would otherwise have gone unpaid.”