The Abbey Tax Blog

Tax comment, tips and news

  • About Abbey Tax
  • Disclaimer
  • Tax services
  • The tax & VAT advisory group
  • The tax investigations team

Accountants start to receive serial tax avoidance letter from HMRC

Posted by Abbey Tax on March 3, 2017
Posted in: Tax Avoidance. Tagged: 6 April 2017, C R Coles, Counter Avoidance Directorate, defeated scheme, Guy Smith, HMRC, serial tax avoidance, Tax.

We have been receiving a steady flow of telephone calls from accountants who have received the same generic letter from HMRC. The letter alleges the accountancy practice represents one or more clients who are under investigation because they have used a tax avoidance scheme, but none of our accountants who have received the letter and rung our tax helplines, have any such clients under investigation!

stop-avoiding-taxes-hand-2

The letter

The generic letter reads as follows:

Dear Sir or Madam

Serial Tax Avoidance Legislation: effective from 15 September 2016

I am sending this letter to you because our records show that you represent one or more clients who we are investigating because they have used a tax avoidance scheme.

I would like to tell you about some of the main points of the Serial Tax Avoidance Legislation to help you give the best possible advice to your clients. You may have already seen this information in official publications or from your professional or trade body. In which case I apologise for any duplication.

The main points are that:

  • Clients who are in a scheme that is defeated (see factsheet CC/FS38 for a definition of ‘defeated’) on or after 6 April 2017 will:
    • receive a warning notice
    • enter a five-year warning period, during which they must give us annual reports of their use of avoidance schemes.
  • Clients who enter into tax avoidance schemes on or after 15 September 2016 and go on to use those schemes during a warning period may:
    •  have to pay a surcharge of up to 60% of the tax due (that is, the ‘understated tax’)
    •  be publicly named as a serial avoider
    •  have their access to tax reliefs restricted.
  • You and your clients can act now to make sure their existing schemes entered into before 15 September 2016 are not affected by the Serial Tax Avoidance Legislation. You can do this by taking one of the following actions. You can:
    •  work with us so that we can agree your client’s use of the scheme before 6 April 2017 (so that their use is ‘settled’)
    •  fully disclose details of the scheme to us before 6 April 2017
    •  tell us before 6 April 2017 that you’ll fully disclose details of the scheme to us, and then do so within the time limit we set (which can be after 6 April 2017).

You can find further information on GOV.UK. Search for factsheet CC/FS38. You can find the Serial Tax Avoidance legislation under Schedule 18 of the Finance Act 2016.

Yours faithfully

C R Coles

Counter-Avoidance Directorate

If any accountancy practices do have clients participating in any such schemes, there is little over a month to go to start the settlement process.

As the letter states, there are penalties and tax relief restrictions placed upon those clients who do not settle.

Penalties

If a client uses a defeated tax avoidance scheme during their warning period, the penalty loading is:

  • 20% for 1 defeated scheme
  • 40% for 2 defeated schemes
  • 60% for 3 or more defeated schemes.

Tax relief restrictions

As well as receiving penalties and having their details published for up to 12 months, clients could find some of their direct tax reliefs are restricted.

Direct tax relief restrictions can cover:

  • Annual Tax on Enveloped Dwellings
  • Apprenticeship Levy
  • Capital Gains Tax
  • Corporation Tax
  • Diverted Profits Tax
  • Income Tax
  • Inheritance Tax
  • National Insurance contributions
  • Petroleum Revenue Tax
  • Stamp Duty Land Tax

Further information is available here . The HMRC Counter-Avoidance Directorate telephone number is 03000 510 350.

Author: Guy Smith, Head of Technical Research

Email: g.smith@abbeytax.co.uk

 

Share this:

  • Twitter
  • LinkedIn
  • Facebook
  • Google
  • Tumblr
  • Print
  • More
  • Reddit
  • Email
  • WhatsApp
  • Telegram
  • Skype
  • Pinterest
  • Pocket

Like this:

Like Loading...

Related

Posts navigation

← Book a place at our Annual Tax Conference!
Budget 2017 – the headlines →
  • Categories

    • Alternative Dispute Resolution
    • Autumn Statements
    • Budgets
    • Campaigns
    • Capital Allowances
    • Compliance Checks
    • Construction Industry Scheme
    • Contract Reviews
    • Cyber
    • Debt Management
    • Dishonest Conduct
    • Domicile
    • Employment Allowance
    • Guest Bloggers
    • High Volume Agents
    • Inheritance Tax
    • Interest and penalties
    • Making Tax Digital
    • Paying HMRC
    • Prosecutions
    • Publishing Deliberate Defaulters
    • Real Time Information (RTI)
    • Repayment checks
    • Research & Development
    • Stamp Duty
    • Status/IR35
    • Task Forces
    • Tax Agent Strategy
    • Tax Avoidance
    • Tax Conference
    • Tax Evasion
    • Tax Investigations
    • Tribunal
    • Uncategorized
    • VAT
  • Abbey Tax Protection

    One Mitchell Court
    Castle Mound Way
    Rugby
    CV23 0UY
    0345 223 2727
    Monday to Friday
    9am to 5.30pm
  • Top Posts & Pages

    • HMRC bringing dog breeders to heel
    • Is it really you making the repayment claim?
    • Interest and penalties charged by HMRC for paying tax late
    • Inheritance Tax - Gifts with reservation
    • HMRC determinations for failing to submit a tax return
  • Blog Stats

    • 188,959 hits
  • Enter your email address to follow this blog and receive notifications of new posts by email.

  • Twitter Updates

    • We're delighted to be returning to #Accountex at Excel London! Come and see us on Stand 192 and take the opportunit… twitter.com/i/web/status/9… 2 weeks ago
    • RT @GabelleTax: Good turnout to our breakfast tax briefing despite the wet weather. Special thanks to our guest speaker Brian Burke from @q… 3 weeks ago
    • We have an opportunity for a Senior #Tax Consultant to join our Head Office team in #Rugby. If you're looking to de… twitter.com/i/web/status/9… 3 weeks ago
    Follow @AbbeyTax
    • RSS - Posts
Blog at WordPress.com.
Cancel
loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.
%d bloggers like this: