Autumn Statement 2016 – Tax Avoidance, Evasion and Compliance

November 29th, 2016

The government claims that since 2010, it has secured around £130bn in additional tax revenue as a result of tackling avoidance, evasion and non-compliance.

Disguised remuneration

Budget 2016 announced changes to tackle the use of disguised remuneration schemes by employers and employees. The scope of these changes will be extended to tackle the use of such schemes by the self-employed to avoid income tax and NICs. Employers who use disguised remuneration avoidance schemes will be denied tax relief for their contributions to such schemes unless tax and NICs are paid within a specified period.

Strengthening tax avoidance sanctions and deterrents

There will be a new penalty for anyone who has enabled another person or business to use a tax avoidance arrangement that is later defeated by HMRC. This new regime was announced in the Spring Budget 2016 and draft legislation will be published shortly. Any person or business that uses tax avoidance arrangements will no longer be able to use the defence of having relied on non-independent advice as taking ‘reasonable care’ when considering penalties.

VAT relief on adapted cars for wheelchair users

The application of the VAT zero-rating for adapted motor vehicles will be clarified to stop the abuse of this legislation, while continuing to provide help for disabled wheelchair users.

VAT flat rate scheme

A new 16.5% rate will available from 1 April 2017 for businesses with limited costs, such as many labour-only businesses. Guidance with the force of law was published on 23 November.

Requirement to correct

There will be a new legal requirement to correct a past failure to pay UK tax on offshore interests within a defined period of time and new sanctions will apply to those who fail to do so.

Requirement to register offshore structures 

The government will consult on a new legal requirement for intermediaries who arrange complex structures for clients holding money offshore to notify HMRC of the structures and the related client lists.

Tackling the hidden economy

HMRC’s data-gathering powers will be extended to money service businesses in order to identify those operating in the hidden economy.

The government will consult on the case for making access to licences or services for businesses conditional on registration for tax. The sanctions for those who repeatedly and deliberately participate in the hidden economy will also be strengthened. The Spring Budget 2017 will set out further details