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News briefing, 26 April 2013
Our weekly comments on tax stories by the national press
Avoidance
The UK's four biggest accountancy firms use knowledge gained from staff seconded to the Treasury to help wealthy clients avoid paying taxes, according to a report by Commons' Public Accounts Committee
Guardian; Independent; Telegraph; Financial Times
Taxation will look at the report in detail next week. Tax specialists from the Big 4 are sometimes seconded to HMRC or the Treasury to help frame workable new legislation, not to make up the law. Their participation will mean they gain deeper knowledge that they can pass to clients. Even the union for senior tax staff, ARC, say it has seen nothing inappropriate in the way secondees work.
A flurry of compensation claims has been lodged against promoters and advisers of tax avoidance schemes following a clampdown by HMRC, according to City law firm Reynolds Porter Chamberlain.
Financial Times
HMRC are taking a more aggressive line on avoidance, and some taxpayers may take the view that it is easiest to pay tax and then seek to recover it from their adviser on the basis an avoidance scheme was unsuitable. The courts have already ruled in favour of at least one client.
Income tax
Liberal Democrat leaders have rebuffed demands from grassroots members for the party to fight the next general election on a pledge to bring back a 50p top rate of income tax.
Independent
Certainty is important in tax: it would help no one for tax rates to go up, down and then up again – and then there is the questions of the 50% efficacy… The recent change to stamp duty land tax for expensive properties has gone some way in introducing Lib Dem ideas and would need little tampering to be converted into a fully fledged mansion tax.
Better-off pensioners may have to pay tax on perks such as their winter fuel allowance or lose them completely, under a plan to be considered during the government's spending review.
Independent
Knowing the Conservatives have promised not to means test or remove pensioners’ benefits, the Liberal Democrats have suggested making the perks taxable for better-off pensioners – although a proposed saving of £250m is unlikely to be worth either the bad publicity it would cause, or the amount it would cost.
Investigations
The number of people prosecuted for tax fraud soared by 53% last year as the government took a more aggressive stance on compliance, according to international law firm Pinsent Masons.
Financial Times
The number of criminal prosecutions is still small at 240, but the increase confirms HMRC’s tougher position against tax dodgers and is beginning to justify the extra money given to the department for compliance work.
HMRC collected an extra £220m from Britain’s super-rich last year, as the result of the work of a taskforce set up to pursue high-earning tax avoiders.
Telegraph
Targeted use of limited HMRC resources can achieve results, it seems – and there is a political advantage for the government in showing that top earners are paying their ‘fair share’. There will, however, be pressure to show that anti-avoidance work continues to succeed in bringing in tax, when it might be appropriate to concentrate on a different area.
Property
Thousands of homeowners are being expected to pay thousands of pounds on additional stamp duty bills after falling victim to irregularities in conveyancing, HMRC have warned.
Financial Times
The situation is the unfortunate consequence of being caught out by dishonest conveyancers. The Revenue’s stance may seem unfair, but it is the department’s job to ensure correct tax is paid regardless of the fact taxpayers acted in good faith.
Pensioners should be asked to pay more tax to promote fairness in the housing market, according to the Fabian Society think-tank.
Financial Times
Pensioners have largely been protected from the government’s austerity programme, and there is little likelihood of the Fabian Society’s recommendations being adopted. The organisation is in favour of an annual property tax, on the basis it would help reduce the “intra and intergenerational inequalities” in the housing market.
Holiday homeowners have been urged to take advantage of certain tax reliefs designed for business owners, despite a recent ruling suggesting the properties should be classed as an investment.
Times
This is the Pawson case, which is understood to be heading for appeal. We probably haven’t heard the last of claims to inheritance tax relief for let properties, but HMRC will resist claims to business property relief for holiday lettings.
- Blog
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