Avoidance

The taxman’s powers to withhold repayments

Users of avoidance schemes will be expected to pay tax upfront under proposals issued by HMRC.

A new consultation document, Tackling Marketed Tax Avoidance, outlines plans to extend accelerated payment of disputed tax to arrangements subject to the disclosure of tax avoidance schemes (DOTAS) regime and to taxpayers being investigated under the general anti-abuse rule (GAAR).

The HMRC information service on tax avoidance arrangements, Spotlights, has added an update on contractor loan schemes in light of the First-tier Tribunal decision in P Boyle (TC3103).

The tribunal dismissed all the arguments put forward by an IT contractor that his contractor loan scheme worked and the money he received was not subject to tax. The judge decided that the money paid over to the taxpayer as loans was “in substance and reality income from his employment” and therefore taxable.

How Orwell’s classic novel foreshadowed HMRC’s current behaviour

National Insurance; capital gains tax; social investment tax relief; creative industries; avoidance; Charity Commission

The Revenue’s approach to tax dodging and the questions advisers should be asking clients

The cases of  Tower Radio  and Aberdeen Asset Management are further evidence of  a shift in the courts against avoidance

A director’s loan account was overdrawn by £200,000 at the end of the accounting year and a dividend of an equivalent amount was declared as a repayment. Ffurther loans totalling £180,000 were made subsequently

HMRC have published a breakdown of the number of legal tax-dodging arrangements revealed to the department under the disclosure of tax avoidance schemes (DOTAS) regime in the six months to 30 September 2013.

The figures show 17 reports covering direct tax were made during the most recent period, the smallest number since DOTAS was introduced in 2004 and nearly half of the 32 registered in the previous half-year.

HMRC have updated their Spotlights page on tax avoidance schemes to draw attention to the department’s recent First-tier Tribunal victory in the LM Ferro Ltd case, which involved an attempt to make a gratuity in the form of restricted shares in another company.

A taxpayer is carrying out consultancy work through a new limited company. Six different classes of share have been issued: one for the consultant, one for his wife, and the others for each of their children

Salaried members of limited liability partnerships (LLPs) will be classed as employees under changes to the taxation of partnerships, HMRC have announced.

The move follows the consultation on proposals for addressing the disguising of the employer/employee relationship through membership of LLPs.

The responses highlighted the problem of disguised employment arising from the interaction of the Alternative Investment Fund Managers Directive (AIFMD) and the existing partnership tax rules on alternative investment fund (AIF) managers who operate as a partnership.