.png)
.png)
Avoidance
Lawyers are scrambling to file compensation claims against tax advisers who sold avoidance schemes later successfully closed down by HMRC.
Financial Times
If reputational damage and accelerated payment notices haven’t already put accountants off advising on schemes, the vultures gathering to sue probably will. But if clients will take part schemes if they want to – which may leave a vacuum into which less-qualified advisers are drawn.
Tens of thousands of taxpayers who have taken part in avoidance schemes are set to receive HMRC notices demanding up-front payment of tax.
Financial Times; Times; Times
The notices will be sent out from August, not “in August” as the Times claims. It is unlikely HMRC will want to deal in one go with all queries that will arise, so the notices will inevitably be staggered.
HMRC have given about 16,000 contractors six months to settle a £430m dispute over complex avoidance schemes involving offshore loans.
Financial Times
HMRC’s press release, swallowed by the press, makes this measure look like part of the accelerated payment process. It is not. The schemes concerned were based on loans from offshore employers, prior to the disguised remuneration rules coming into force. The Revenue is encouraging participants to settle, but the department does not yet appear to have a tribunal judgment that such schemes do not work. Cynics might look at the recent Rangers judgment – in which the taxpayer was successful in a scheme involving loans from an offshore trust – and think the taxman is trying it on.
Income tax
One in three workers will be a higher rate taxpayer within two decades, as the 40p band becomes the norm for millions of the middle class, the Office for Budget Responsibility has suggested.
Telegraph
The assumption lying behind this forecast is that the higher-rate threshold will rise only by inflation for the next 20 years. It is unlikely that chancellors will be so tough on the middle classes for so long.
Inheritance tax
Rising house prices combined with a frozen inheritance tax (IHT) allowance have caused the number of properties qualifying for the tax to increase by 50% over the past five years.
Times
This claim is correct only when there is IHT band to be offset. Married couples and those in civil partnerships will have two to offset at the second death, assuming they have all-to-spouse/partner- wills.
Investigations
Thousands of personal bank statements will handed to HMRC under proposals to allow the department access to tax debtors’ accounts. The plans have been criticised by the Commons’ Treasury select committee as going against Magna Carta.
Financial Times; Telegraph; Guardian
Quoting Magna Carta is the last refuge of a desperate argument, and it is arguable whether clause 39 of the 1215 document would be breached as the select committee claimed. That said, Taxation is currently campaigning against the Direct Recovery of Debts proposals.
Scrutiny by HMRC of some of the UK’s wealthiest individuals has yielded £1bn of extra tax revenue since 2009.
Financial Times
This is news of the work of the Revenue’s high net worth unit. There have been criticisms of its methodology for counting the tax it has saved: the National Audit Office has approved the figures but said HMRC should be transparent about the calculation. The numbers are crucial because the tax department secured £1bn of extra financing (or reduced cuts) by promising it would recoup far more in tax collected.
Pensions
New anti-avoidance measures will see individuals face large cuts to their annual allowance for future pension contributions if they withdraw tax-free cash from their accumulated retirement pot.
Financial Times
Taxation will cover this at length soon. In short, the price of using the new totally flexible drawdown will be an annual allowance of just £10,000. Still, it’s better than the total ban on contributions under the current flexible drawdown rules.
George Osborne is set to announce a reduction in the 55% tax rate on drawdown pension funds due when the holder dies.
Telegraph
The supposition is that the new rate will be 40%, aligned with IHT, but that may open up opportunities to pass tax-relieved funds and tax-free growth down generations, with only the 40% IHT liability they would have suffered anyway.
