HMRC Threatens Tax Avoiders With £1m Fines

The tax man is threatening fines of up to £1 million for high-earners shielding their income in tax avoidance schemes.

HM Revenue & Customs (HMRC) has published a list of hundreds of schemes and laid out in uncompromising terms the likely penalties for taxpayers who fail to pay up.

Around 43,000 notices to pay tax are on their way to 33,000 individuals and 10,000 businesses involved in tax avoidance schemes.

The average amount of money in dispute is £262,000, while a few taxpayers owe more than £10 million.

10 facts about tax avoidance

Alongside the list of tax avoidance schemes, HMRC has listed 10 facts they claim scheme promoters do not tell their clients:

Although arranging tax affairs to minimise tax is legal, most avoidance schemes do not work and taxpayers buying into them still owe any tax due

Fees paid to scheme promoters are not part of the tax due, so failed tax avoidance schemes can lead to bigger bills

If the scheme goes to court, legal costs will add to the bill

Any attempt to deliberately deceive or conceal financial information could lead to a criminal prosecution

If the case goes before a tribunal or court, anyone involved in a failed tax avoidance scheme could face adverse publicity in the media

HMRC issuing a scheme registration number is not approval of the scheme, merely a notice that the details have been supplied to HMRC by the promoter

Involvement in tax avoidance schemes could flag taxpayers as high-risk with HMRC and lead to closer scrutiny of their financial affairs.

HMRC wins 80% of tax avoidance cases that go before the courts

Most scheme promoters take a fee but do not indemnify clients against the risk of failure

Any tax sheltered in the scheme must now be paid upfront and then reclaimed, so taxpayers have no cash flow benefit

Financial Secretary to the Treasury, David Gauke, said: “We are cracking down on the minority who try to avoid paying the right amount of tax because what they do is unfair on the many millions of us who follow the rules.

Illegal schemes

“Tax avoidance is expensive. Anyone joining a scheme will have to pay fees as well as the tax they owe and any penalties if the scheme is found to be illegal.

“Scheme promoters are likely to tell taxpayers what they can save but not the risks and costs associated with an illegal scheme, which is why I have explained the details now.”

HMRC list of tax avoidance schemes requiring taxpayers to pay