Source · Select Committees · Public Accounts Committee
Recommendation 5
5
It is too easy for taxpayers to be unwittingly lured into tax avoidance schemes.
Conclusion
It is too easy for taxpayers to be unwittingly lured into tax avoidance schemes. HMRC introduced the loan charge in 2019 to recoup tax from people who used ‘disguised remuneration’ schemes to avoid tax. The imposition of the loan charge on taxpayers who were unknowingly sold an unlawful scheme by unscrupulous tax agents has led to some being financially damaged. HMRC’s strategy for tackling tax avoidance is two-pronged. It wants to reduce the supply of, and demand for, avoidance schemes. It said there are now 20 to 30 unscrupulous promoters of tax avoidance schemes, most of which relate to employment taxes. These promoters are mainly based outside the UK and have complex organisational structures which make them more difficult to investigate. However, HMRC considers it has sufficient powers to tackle promoters of avoidance schemes. On the demand side, HMRC is trying a new approach to identify and alert users of avoidance schemes and offer them help to get out. We welcome this change in approach, and HMRC should develop it by helping taxpayers not to enter into the schemes in the first place. Recommendation: To reduce the risk of taxpayers getting involved in tax avoidance schemes, HMRC should, in its Treasury Minute response, set down how it will make it easier for taxpayers to identify illegal schemes and the unscrupulous tax agents who promote them.
Government Response
Not Addressed
HM Government
Not Addressed
5: PAC conclusion: It is too easy for taxpayers to be unwittingly lured into tax avoidance schemes. 5: PAC recommendation: To reduce the risk of taxpayers getting involved in tax avoidance schemes, HMRC should, in its Treasury Minute response, set down how it will make it easier for taxpayers to identify illegal schemes and the unscrupulous tax agents who promote them 5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 HMRC continues to build on the strategy outlined in ‘Tackling promoters of mass- marketed tax avoidance schemes’ published in March 2020. This includes raising awareness and helping taxpayers steer clear of avoidance through targeted communications and early interventions. 5.3 HMRC refreshed their ‘Tax avoidance – don’t get caught out’ campaign in 2021, which helps taxpayers spot tax avoidance schemes, understand the risks from getting involved in avoidance, and get help and further information. HMRC also highlight avoidance schemes through their ‘Spotlight’ publications and articles in trade press. Since April 2020, HMRC have written to around 33,000 taxpayers who may have entered into a tax avoidance scheme, advising them how to exit the scheme before they build up significant bills. 5.4 HMRC continue to build on their work with professional and partner bodies. In November 2020, HMRC and the Advertising Standards Authority issued a joint Enforcement Notice setting out what promoters should and should not include in advertising. As at October 2021, eleven websites had been shut down and 5 sites amended to comply with the notice. 5.5 In November 2021, HMRC published ‘Use of marketed tax avoidance schemes in the UK (2019-20)’, which provides information about the state of the UK avoidance market, including what HMRC are doing to tackle those who promote or enable avoidance schemes. New powers introduced in Finance Act 2022 enable HMRC to name promoters and the schemes they promote at the earliest possible stage, to support taxpayers to stay clear of avoidance.