The Spring Statement was held on 13th March 2019 and went rather unnoticed. No big announcements were expected, not least due to continuing uncertainty over Brexit. What was announced in the Spring Statement was apparently all good news, with borrowing and debt forecasted to reduce each year, and employment increasing.
Published alongside the Spring Statement was a document titled, “Tackling tax avoidance, evasion and other forms of non-compliance.” HMRC attribute much of its so-called success to their efforts concerning forms of tax avoidance;
“The tax gap – the difference between the tax that should be paid and what the Exchequer collects – is at a near-record low, and the joint lowest level it has been in five years thanks to HM Revenue and Customs’ (HMRC) sustained efforts to tackle non-compliance, and to help customers get things right from the start…”
This is a very bold statement as for many individuals and businesses it is often extremely difficult to get things right from the start.
Although IR35 is not mentioned within the document, reform of IR35 in the public sector proved to be a rather chaotic period for many public sector organisations who suddenly found themselves having to be well versed enough in IR35 to make decisions over whether workers are employed or self-employed. HMRC’s guidance can be complex even for tax professionals, let alone for organisations who had never before had to consider the legislation.
HMRC had also spent considerable resources in putting together the ‘CEST’ (Check Employment Status for Tax) tool, which was supposed to help end clients make determinations concerning the employment status of its self-employed workers from April 2017, when off-payroll reforms in the public sector were implemented.
The tool was later found not to be fit for purpose, missing a crucial employment status test, and in 15% of cases, failing to provide an actual opinion on employment status. This tool certainly did not help thousands of organisations to ‘get things right first time’. With the tool to be updated prior to implementing further IR35 reform in the private sector in April 2020, it is apparent that many organisations may have received an incorrect determination as well.
Of HMRC’s success in tackling tax avoidance the document further stated;
“This government has introduced over 100 measures to tackle tax avoidance, evasion and other forms of non-compliance since 2010 which, alongside HMRC’s compliance work, have secured and protected an additional £200 billion in tax revenue which would otherwise have gone unpaid. This success demonstrates the government’s continued efforts to address tax avoidance, evasion and non-compliance in all its forms.”
HMRC paint a very positive picture, but we know that despite HMRC’s positive propaganda, the efforts in tackling tax avoidance have not been so successful.
The introduction of the loan charge with regard to repayment of taxes concerning tax avoidance schemes has resulted in many individuals trying to make arrangements with HMRC with regard to the loan charge which will be introduced from 5th April 2019, but HMRC have been unable to process all of the requests they have received to date due to insufficient resources.
It is claimed that an additional £2.1 billion will be raised from tax avoidance measures by 2023-24, and therefore HMRC’s efforts to tackle tax avoidance are not going to end any time soon. We’re all in it for the long haul and although HMRC don’t always get it right, HMRC are not known for being sympathetic to general taxpayers when they get things wrong.
Those in any doubt over their tax affairs should seek some professional advice sooner rather than later.
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