Tackling tax avoidance evasion and non compliance

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Tackling tax avoidance evasion,and non compliance,November 2017. Crown copyright 2017, This publication is licensed under the terms of the Open Government. Licence v3 0 except where otherwise stated To view this licence visit. nationalarchives gov uk doc open government licence version 3 or write to. the Information Policy Team The National Archives Kew London TW9 4DU. or email psi nationalarchives gsi gov uk, Where we have identified any third party copyright information you will. need to obtain permission from the copyright holders concerned. This publication is available at www gov uk government publications. Any enquiries regarding this publication should be sent to us at. public enquiries hmtreasury gsi gov uk,ISBN 978 1 912225 36 1. Tackling tax avoidance evasion,and non compliance,Introduction.
A fair tax system is key to building a fairer society From individuals to the largest companies. everyone must pay their fair share towards our vital public services The vast majority already do. The UK s tax gap the difference between what is owed and what HMRC actually collect is. one of the lowest in the world and it has reached a record low of 6 0 1 But there is a minority. who try to break the rules and others who enter into avoidance schemes or aggressive tax. planning arrangements which clearly go beyond what Parliament intended. The government has shown it will act Including the action taken at this Budget the government. has introduced over 100 measures since 2010 These and HMRC efforts have collected and. protected an additional 160 billion since 2010 2, The UK is also spearheading international efforts to improve tax transparency We have made it. harder for people to hide their money abroad by leading the global drive to introduce the. Common Reporting Standard This means that HMRC along with almost 50 other tax. authorities now exchange information automatically on accounts held offshore and by. September next year over 100 jurisdictions will be participating in this game changing initiative. At Autumn Budget 2017 the government announces 18 measures and additional investment in. HMRC to tackle avoidance evasion and non compliance Together these are forecast to raise an. additional 4 8 billion between now and 2022 23, Sources of aggressive tax planning avoidance evasion and. non compliance, Avoidance evasion and non compliance can be seen in a wide range of behaviours across. different customer groups and taxes Measuring tax gaps 2017 sets out the scope and scale of. the challenges faced by HMRC, These range from taxpayer errors 10 of the tax gap or failing to take reasonable care 18. to differences in how to interpret legislation 18 organised criminality 15 evasion 15. and avoidance 5 It also varies by customer group with contributions to the tax gap coming. from small and medium sized businesses 46 large businesses 29 criminals 15 and. individuals 11, The government will continue to build on the steps it has already taken to address these.
challenges across all parts of the economy This includes developing new measures to tackle. emerging threats as well as working internationally where multilateral action is needed. This paper lists over 100 measures introduced by the government since 2010 In particular the. government has taken action in four main areas, Measuring Tax Gaps 2017 https www gov uk government statistics measuring tax gaps. HMRC Annual report https www gov uk government publications hmrc annual report and accounts 2016 to 2017. Marketed tax avoidance, The government has taken successive actions since 2010 to deter the marketing and use of tax. avoidance schemes This has included increasing the penalties and consequences for those who. devise enable or use these schemes removing the economic benefit from avoidance and. introducing a penalty which ensures those charged cannot keep a single pound of what they. make helping others to avoid tax,The government has. introduced the UK s first General Anti Abuse Rule GAAR Finance Act 2013. introduced Accelerated Payment and Follower Notices and powers to act against. Promoters of Tax Avoidance Schemes POTAS Finance Act 2014. successively strengthened and expanded the Disclosure of Tax Avoidance Schemes. DOTAS regime Finance Act 2015, introduced new penalties for serial avoiders who persistently enter into tax. avoidance schemes that are defeated STAR Finance Act 2016. introduced a tough new financial penalty to deter enablers of tax avoidance as. well as a new disclosure regime for indirect tax avoidance schemes Finance Act. tackled contrived arrangements to disguise remuneration typically providing loans. to employees through third parties by imposing a new income tax and NICs charge. from April 2011 Finance Act 2011 and a charge on loans outstanding at 5 April. 2019 Finance Act 2016 and Finance No 2 Act 2017, Offshore tax evasion and the use of offshore structures.
The government has led the global drive to tackle offshore tax evasion by promoting the sharing. of information and creating tough new penalties to encourage compliance. For example the UK was at the forefront of the OECD work to develop the Common Reporting. Standard OECD Council s approval on 15 July 2014 an international tax transparency. standard that means HMRC along with almost 50 other tax authorities including all UK Crown. Dependencies and Overseas Territories with financial centres is now receiving information. automatically on financial accounts held offshore By September next year over 100 jurisdictions. will be participating, The government will take the steps required to investigate any wrongdoing In response to the. Panama Papers work undertaken by HMRC resulted in 66 criminal and civil tax investigations. and HMRC have asked the International Consortium of Investigative Journalists ICIJ for the data. from the recent Paradise Papers to see what further investigations are required The. government has also introduced, a new simpler criminal offence and increased penalties for offshore evaders Finance. Acts 2015 and 2016, penalties for those who deliberately help others evade tax offshore Finance Act. 2016 and a new corporate criminal offence for corporate bodies and. partnerships that fail to prevent their representatives from facilitating tax. evasion Criminal Finances Act 2017, a new requirement to correct any past offshore tax non compliance or else greatly. increased penalties will apply Finance No 2 Act 2017. At Autumn Budget 2017 the government is increasing the time limits for HMRC to assess. offshore tax non compliance to at least 12 years in all cases and will consult on this in. spring 2018, Cross border tax arrangements of multinational businesses.
The government is committed to having a competitive corporate tax system but is clear that. companies must pay their fair share, In 2015 the government introduced the Diverted Profits Tax which counters aggressive tax. planning by large multinational companies that enter contrived arrangements to artificially divert. profits away from the UK At Autumn Budget 2017 the government has gone further and. announced that it will again expand the UK s withholding tax rights on royalties to prevent. multinational businesses primarily in the digital sector recognising profits which relate to UK. sales in companies in low tax countries, The UK has also been at the forefront of multilateral action taken over the last few years through. the G20 and OECD to address Base Erosion and Profit Shifting BEPS by reforming international. tax standards and agreeing rules that each country can introduce to address BEPS Action taken. in the UK as a result of this international effort includes introducing. interest restriction rules which prevent large multinationals claiming excessive tax. deductions for interest expense and ensures they pay their fair share Finance Act. hybrid mismatch rules which prevent multinationals from exploiting differences in. how countries tax financial instruments entities and branches Finance Act 2016. Other measures to tackle avoidance evasion and non compliance. The government has also acted to tackle onshore evasion and the hidden economy including. extending HMRC s data gathering powers to merchant acquirers and aggregators. who process credit and debit card payments on behalf of retailers Finance Act. 2013 business intermediaries providers of electronic stored value payment. services Finance Act 2016 and Money Service Businesses Finance Act 2017. reducing Excise fraud by introducing a registration scheme for alcohol wholesalers. Finance Act 2015, addressing online sales fraud by non compliant overseas traders by enabling HMRC. to hold an online marketplace jointly and severally liable for the unpaid VAT of an. overseas business that sells goods in the UK via the online marketplace s website. Finance Act 2016 and introducing a due diligence scheme for UK fulfilment. houses Finance No 2 Act 2017, At Autumn Budget 2017 the government is going further to tackle evasion by extending. HMRC s powers to hold online marketplaces jointly and severally liable JSL for the unpaid VAT. of all traders on their platforms, Giving HMRC additional resources to further tackle these challenges.
The government has invested around 2 billion in HMRC since 2010 and will continue to invest. in staff and new technology to ensure HMRC has the resources to further tackle avoidance. evasion and non compliance This includes, 900 million at Spending Review 2010 to bring in an additional 7 billion per year. in tax revenues, 800 million at Summer Budget 2015 to tackle non compliance by large businesses. and the wealthy as well as new teams to investigate organised crime. 155 million at Autumn Budget 2017 to address a range of avoidance and evasion. activity including tackling enablers and facilitators of tax fraud. This investment has helped change the way that HMRC deals with wealthy individuals and large. businesses and has resulted in criminal convictions for tax fraud rising to over 1 000 a year a. total of 4 900 years of custodial sentences and revenue losses prevented of more than 10. billion since 2010,A commitment to further action, The government has consistently acted to tackle aggressive tax planning avoidance evasion and. non compliance in the tax system and has already made game changing strides in tackling. the problem, Users of tax avoidance schemes can no longer hold onto their money whilst their tax liabilities. are disputed They now have to pay up front under the Accelerated Payments regime which has. changed the underlying economics of tax avoidance and seen more than 4 billion additional. tax paid over to the Exchequer, The new Diverted Profits Tax has already yielded more than was forecast and has been followed.
by Australia who have introduced a similar tax, And the government has continued to invest in HMRC to ensure it has the right resources. The measures announced at Autumn Budget 2017 continue that commitment to ensure. everyone from individuals to the largest companies pay their fair share towards our vital. public services, Table 1 A Measures between Summer Budget 2010 and Spring Budget 2017 to tackle tax avoidance evasion other forms of non compliance and. aggressive tax planning,Fiscal event Measure title Chapter text. Summer Budget June Accounting 2 110 Legislation will be in the Finance Bill introduced after the Budget with effect from Budget day to prevent. 2010 Derecognition avoidance of corporation tax using accounting derecognition rules in relation to loans and derivatives. Summer Budget June Alternative Investment 2 111 Legislation will be introduced with effect from Budget day to prevent tax avoidance involving the. 2010 Funds creation for corporate investors of a credit for UK tax where no UK tax has been paid. Summer Budget June Financial Summer Budget June 2010. 2010 Securities 2 112 The Government will now consult on introducing a power for HMRC to require financial security where. PAYE NICs are at serious risk of non payment rather than legislate in the upcoming Finance Bill as announced. at the March 2010 Budget,Budget 2011, 2 205 Financial securities for PAYE and NICs Following consultation HMRC will be able from April 2012 to. require a security from employers where there is a serious risk that tax due under PAYE or Class 1 NICs will go. unpaid Finance Bill 2011, Summer Budget June Life insurance 2 113 An anti avoidance rule that applies when a transfer of business sidesteps the rules for non profit funds.
2010 with unrecognised profits will be legislated for in the Finance Bill introduced after the Budget Additionally. legislation will be in the Finance Bill introduced in the autumn to modify the tax rules that apply to Overseas Life. Insurance Companies and the application of the transfer of business rules when non profit business is. transferred to a non EEA country, Summer Budget June General Anti Abuse Rule Summer Budget June 2010. 2010 GAAR 2 114 The Government will engage informally with interested parties to explore whether there is a case for. developing a General Anti Avoidance Rule GAAR This will be part of wider work on improvements to the tax. policy making process,Budget March 2012, 1 194 Budget 2012 announces that the Government accepts the recommendation of the Aaronson Report that. a General Anti Abuse Rule GAAR targeted at artificial and abusive tax avoidance schemes would improve the. Tackling tax avoidance evasion and non compliance Introduction A fair tax system is key to building a fairer society From individuals to the largest companies everyone must pay their fair share towards our vital public services The vast majority already do The UK s tax gap the difference between what is owed and what HMRC actually collect is one of the lowest in the world and

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