Home >> Tax News >> Millionaires to be named and shamed for tax avoidance by ‘cowboy advisers’
Author – Charlotte Lewis Published – 13:00 25 July 2012
Treasury Minister, David Guake, has announced government plans to ‘crack down on the promoters of aggressive, contrived, tax avoidance schemes”, asking accountants to unmask clients using ‘aggressive’ tax avoidance arrangements.
Following the disclosure of Jimmy Carr’s tax affairs and his use of the Jersey based ‘K2’ tax avoidance scheme, which allowed him to pay an estimated 1% income tax rate on earnings; Publicly apologising for his participation in the legal tax avoidance scheme Jimmy acknowledged that it was a ‘serious matter’.
Experts have reported that the comedian used the K2 tax avoidance scheme to channel money earned from television appearances , DVD and merchandise sales into a Jersey based company, which paid Carr back ‘loans’ exempt from tax. It is estimated that Carr protected £3.3m a year from UK Income tax rates through the K2 tax avoidance vehicle.
There have since been many moral debates surrounding the fair use of tax avoidance schemes and what does and does not constitute an ‘aggressive’ tax avoidance vehicle.
To address this problem Guake is proposing new powers that will allow HMRC to ‘demand more information from scheme promoters’, including accountants, promising that names given would not be put in the public domain, unless a case is taken to the first tier tax tribunal.
Further plans in support of the government’s crackdown on the promotion of ‘aggressive’ tax avoidance include the requirement for HMRC to publish additional information on tax avoidance schemes and the risks that are attached to tax avoidance schemes for those involved.
Representing nearly 14% of the UK tax gap, which currently stands at £35bn, Guake said on the topic of ‘aggressive’ tax avoidance, in a speech to the Policy Exchange think tank:
“We are building on the work we have already done to make life difficult for those who artificially and aggressively reduce their tax bill. These schemes damage our ability to fund public services and provide support to those who need it. They harm businesses by distorting competition. They damage public confidence. Any they undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride.”
Looking to improve communications about tax avoidance, a consultation document on the Treasury Minister’s proposals was released on HMRC’s website on Monday 23 July, entitled ‘Lifting the Lid on Tax Avoidance Schemes’, and is open for comments until 15 October 2012.
Kevin Kinsella, of KinsellaTax, said:
“Can you shame a millionaire? I don’t think these types really give a darn about what people think about them, unless, of course, there is a peerage about them, that really can change peoples outlooks”
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To discuss an HMRC Tax Avoidance enquiry in confidence you can call our team of tax investigation experts anytime, day or night, on 0800 471 4546, or alternatively you can submit your tax enquiry online.