Update to HMRC Tax Avoidance documents

HMRC are increasing their focus on tax evasion and "unacceptable" tax avoidance. The ‘Tackling tax avoidance, evasion, and other forms of non-compliance’ policy document has now been updated to include the anti-avoidance measures announced in the Budget 2018 and also to confirm their current approach and how they intend to meet their goals of preventing tax avoidance and tax evasion.

The HMRC ‘No Safe Havens 2019’ paper is mainly focused on offshore tax non-compliance, issuing a warning to organisations both based in and with links to the UK to assess their prevention procedures to make sure that there are no loopholes that will allow tax evasion. As an estimated £11bn is lost to tax evasion each year, if a company or partnership fails to prevent its employees and other "associated persons" from enabling tax evasion to happen in the UK and abroad, prosecutions will be allowable.

Section 93 (1) of Finance Act 2019 required the Chancellor of the Exchequer to review the provisions relating to tax avoidance within the Act within 6 months of the Act passing. The review concludes that the government is confident all recent anti-avoidance measures will be effective in reducing avoidance and evasion. The report does however acknowledge that many of the anti-avoidance provisions in Finance Act 2019 have not yet come into effect and for those that have, not enough time has passed to be able to fully assess the effectiveness.

On a related note, there has been a marked increase in first-tier tribunal cases for disputes between taxpayers and HMRC (up 43% in two years), showing that they are prepared to fully query and contest demands made by HMRC in the course of these challenges.