HMRC seem to be making progress in their attempts to discourage, and recover unpaid tax, from participators in tax avoidance schemes.

In a recent high profile case, HMRC have recovered more than £434m in unpaid taxes from users of the tax avoidance scheme promoted by the Ingenious Film Partnership. Their scheme tried to use artificial losses arising from investments in a range of movies, including the blockbusters Avatar, Life of Pi and Die Hard 4.

Director General of Enforcement & Compliance Jennie Granger said:

“These were some of the biggest films of all time, and the schemes involved people claiming far more in tax than they invested in the first place. We always say that if something is too good to be true then it probably is. And in this case the long legal battle will mean that investors face even bigger bills for interest and legal costs.”

In a second win for HMRC, they were successful in stopping a scheme by Icebreaker who attempted to create artificial losses from investments in limited liability partnerships.

For both schemes users claimed more in tax relief than they had invested.

The Icebreaker decision is HMRC’s second win against the scheme, following a victory in the First Tier Tribunal in 2014. The total tax at stake was £134 million.

This means that HMRC has now secured more than £1.2 billion in disputed tax from wins in avoidance litigation since the beginning of April.

A reminder, that if either parent’s income exceeds £50,000 this will affect eligibility for Child Benefits.

A tax charge, known as the ‘High Income Child Benefit Charge’ (HICBC), is payable if a parent has an individual income over £50,000 and:

·         either parent claims Child Benefit, or

·         someone else gets Child Benefit for a child living with a parent and they contribute at least an equal amount towards the child’s upkeep

It doesn’t matter if the child living with you is not your own child.

If the HICBC does apply, the parent with the highest income (if both exceed £50,000) will need to declare the amount of the Child Benefit received on a Self Assessment tax return. The tax charge will then claw back the Child Benefit received at the rate of £1 for every £2 that income exceeds £50,000. This means that if income is more than £60,000 the HICBC will equal Child Benefit received.

If parents can see that one or both incomes will exceed £60,000 they can elect to withdraw their Child Benefit claim in which case, no entry on a tax return would be required.

If income is in, or just over the £50,000 to £60,000 band, paying pension contributions or donations under gift aid can reduce the impact of the HICBC as well as reducing tax.

Thousands of British organisations will receive guarantees over EU funding in a new move by Chancellor Philip Hammond last month.

Key projects supporting economic development across the UK will be given the green light, ending uncertainty over their future following the UK’s decision to leave the European Union.

Assurances set out by the Treasury include:

·         all structural and investment fund projects, including agri-environment schemes, signed before the Autumn Statement, will be fully funded, even when these projects continue beyond the UK’s departure from the EU

·         the Treasury will also put in place arrangements for assessing whether to guarantee funding for specific structural and investment fund projects that might be signed after the Autumn Statement, but while we remain a member of the EU. Further details will be provided ahead of the Autumn Statement

·         where UK organisations bid directly to the European Commission on a competitive basis for EU funding projects while we are still a member of the EU, for example universities participating in Horizon 2020, the Treasury will underwrite the payments of such awards, even when specific projects continue beyond the UK’s departure from the EU

As a result, British businesses and universities will have certainty over future funding and should continue to bid for competitive EU funds while the UK remains a member of the EU.

And in a new boost to the UK’s agricultural sector Mr Hammond also guaranteed that the current level of agricultural funding under CAP Pillar 1 will be upheld until 2020, as part of the transition to new domestic arrangements.

The Treasury will work closely with the devolved administrations on subsequent funding arrangements to allow them to prioritise projects within their devolved responsibilities.

Chancellor of the Exchequer, Philip Hammond said:

“The UK will continue to have all of the rights, obligations and benefits that membership brings, including receiving European funding, up until the point we leave the EU.

We recognise that many organisations across the UK which are in receipt of EU funding, or expect to start receiving funding, want reassurance about the flow of funding they will receive.

That is why I am confirming that structural and investment funds projects signed before the Autumn Statement and Horizon research funding granted before we leave the EU will be guaranteed by the Treasury after we leave. The government will also match the current level of agricultural funding until 2020, providing certainty to our agricultural community, which play a vital role in our country.

We are determined to ensure that people have stability and certainty in the period leading up to our departure from the EU and that we use the opportunities that departure presents to determine our own priorities.”

Generally speaking, the purchase of any vehicle where there is any element of private use means any reclaim of VAT may be restricted. HMRC’s website offers the following guidance:

·         You may be able to reclaim all the VAT on a new car if you use it only for business.

·         The car must not be available for private use, and you must be able to show that it isn’t, e.g. it’s specified in your employee’s contract.

·         Private use includes travelling between home and work, unless it’s a temporary place of work.

Due to the private use restriction, it is usual that no VAT can be recovered on the purchase of a car. However, you may be able to claim all the VAT on a new car if it’s mainly used:

• as a taxi
• for driving instruction
• for self-drive hire

If you are buying a commercial vehicle, you can usually reclaim the VAT. For example, a van, lorry or tractor. You can only reclaim the VAT if you use the vehicle in a business.

If they’re used only for business, you can also reclaim VAT on:

• motorcycles
• motorhomes and motor caravans
• vans with rear seats (combi vans)
• car-derived vans

If you are in any doubt that a proposed vehicle purchase is eligible for a VAT reclaim please contact us for advice. Reclaiming the VAT when a claim is in doubt will only attract the attention of HMRC.

Tax evaders are set to face tough new sanctions under plans detailed by HM Revenue and Customs today.

The proposals will mean that those who do not come forward and pay outstanding taxes from offshore investments and accounts, could face even tougher penalties of up to three times the tax they try to evade, and increase their risk of potential criminal charges.

HMRC will be even better able to target evaders from October 2016, when it starts to receive an unprecedented amount of data on those with offshore accounts in the Crown Dependencies and Overseas Territories – one year ahead of even more data coming in from across the globe, when the Common Reporting Standard comes into force.

The Financial Secretary to the Treasury, Jane Ellison, said:

Every penny of tax that people evade deprives our public services of essential funding and we are focused on collecting all tax that is due.

From October we will start to receive data on the offshore finances of UK taxpayers. This is a game-changer in the fight against evasion and its time for anyone who is evading tax to do the right thing and pay what they owe.

Director General of Enforcement and Compliance for HMRC, Jennie Granger, said:

HMRC is getting tougher on tax evasion. It’s a crime which unfairly places a greater burden on the vast majority of people and businesses who pay the tax that they owe on time.

We are determinedly tackling this. We will find those who think they can dodge paying tax in this country. We’ve closed old disclosure facilities, increased penalties, and ramped up our powers to tackle evaders and those that help others evade – the days of any safe havens for tax evaders are numbered.

Our message is simple – come to us pay the tax and penalties that are due, before we target you with the introduction of even tougher sanctions and game-changing data.

Alongside these changes, HMRC will open its Worldwide Disclosure Facility (WDF) from 5 September 2016. The WDF, announced at Budget 2015, allows those with outstanding tax to pay to put their affairs in order and will offer no special terms. HMRC will release further details when it opens.

HMRC has been clear that that not paying tax by failing to disclose offshore income and investments is illegal. In 2014-15 HMRC brought in £26.6 billion from tackling tax evasion and avoidance, and since 2010 has raised more than £2.5 billion from offshore evasion initiatives.

Today’s action builds on the wide range of measures introduced by the government to toughen sanctions for all those involved in offshore tax evasion. This includes a new criminal offence for tax evasion, increased civil sanctions for offshore tax evaders, and civil sanctions for those who enable offshore evasion.