Article posted on 22 January 2013

Under renewed criticism for its inefficiency, HMRC is turning up the heat on users of complex tax avoidance schemes.

Shortly before Christmas, HMRC announced that it was offering a ‘settlement opportunity’ to users of some of the more aggressive tax avoidance schemes, including certain film-based arrangements. HMRC plans to have contacted anyone eligible by the end of January, although it has not spelt out an end date by which an offer must be accepted. Ominously, HMRC says that, “Where people decline the settlement opportunity, we will increase the pace of our investigations and accelerate disputes into litigation.”

The move by HMRC is not an example of seasonal kindness – HMRC is under great pressure from the Government and Parliament. The National Audit Office recently revealed that HMRC had a backlog of 41,000 open avoidance cases involving individuals and smaller companies.

The vast majority of these resulted from marketed avoidance schemes and almost half of the cases were three or more years old. These statistics attracted considerable criticism from the House of Commons’ Public Accounts Committee. Its Chair, Margaret Hodge, described the HMRC case load as ‘eye-watering’ and expressed concern that “without a credible plan to resolve these cases and to stamp out future avoidance, the public will lose confidence in the tax system’s ability to collect even-handedly what is due from all individuals and companies.”

The Financial Services Authority does not regulate tax advice.