Government updates tax avoidance plan
The UK government has updated its statement on measures aimed at reducing levels of evasion and avoidance in the tax system.
As well as providing more money to HMRC to chase those who have avoided tax either illegally or through using legal loopholes, there have been greater efforts to prosecute offenders and specialised teams established to chase up both corporations and wealthy individuals.
The announcement noted that 200 investigators have been added and the result has been a rise in prosecutions of individuals from 165 in 2010-11 to 565 in 2012-13. In 2014-15 it anticipates the figure will be over 1,100.
Other efforts have included urging the Organisation for Economic Co-operation and Development (OECD) to draw up new rules to prevent companies from shifting profits from one location to another in order to avoid paying tax in the countries where the revenues have been generated.
The statement also noted that over 100 investigators are working for HMRC in an effort to chase up wealthy individuals who have not paid tax.
According to Treasury estimates, the tax gap was £32 billion in 2010-11, or 6.7 per cent of the total tax take HMRC was due. Of this, £9 billion was lost through evasion and avoidance. However, it has said that so far the £45 million spent on tackling this has secured an extra £1.4 billion in revenue.
While the government awaits action by the OECD on international corporate tax avoidance issues, it has also pledged new legislation to back up its general anti avoidance rule, by penalising tax advisors who sell aggressive avoidance schemes.
As the government continues its efforts – even with a general election approaching – many firms could benefit from having string accountancy support to make sure they do not fall foul of the law.
Such expertise may also be invaluable when the spring comes and the various party manifestos set out what more they will look to do to curb tax avoidance and evasion.
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