Tax avoiders to be forced to pay off bills sooner
THE TAXMAN will now demand faster payments of income tax and national insurance from people using disclosed avoidance schemes, under further steps to fight the practice.
The new rules mean HM Revenue & Customs will hold onto disputed tax while the individual case is ongoing. Osborne referred to the changes as giving HMRC “modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to, like most other western countries”.
This means in the event of a court case, HMRC will hold on to the disputed amount until the disagreement is settled. The authority would have to repay interest on the cash to the individual if the case is not successful.
The Treasury says that at its peak the government will be clawing back over £1bn in revenue in 2015-16 and 2016-17.
HMRC is also cracking down on dual contracts in the UK and abroad, saying that most are used for avoidance purposes. This could hit employees with separate contracts for their work in different countries, issued by the same employers from April.
KPMG’s Marc Burrows said: “Although we fully expected low tax countries such as Hong Kong, Singapore or the Channel Islands to be affected… it seems that countries where the tax regime is perceived as comparable to the UK, will also be caught.”
Andrew Watters of law firm Thomas Eggar expressed scepticism at the move: “A Budget that is trying to encourage investment and enterprise through tax incentives risks being fatally undermined, since to respond to a tax incentive means you run the risk of being categorised as a greedy devious social pariah.”