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HM Revenue & Customs is considering the implementation of preventative measures to discourage taxpayers from entering into tax avoidance schemes. However, the measures which are being suggested could result in taxpayers being hit twice.

Tax evasion has recently been tackled with the Liechtenstein Disclosure Facility and the measures to target High Net Worth Individuals. HMRC entered into new discussions on 31st May 2011 to put in place new measures for taxpayers who enter into tax avoidance schemes. Rather than using enforcement measures to tackle users of tax avoidance schemes, HMRC is looking for a prevention strategy. Removing the possibility of any cash benefit for taxpayers who use the schemes is the aim of HMRC. At present, if a court rules that the scheme has not been implemented correctly, or is not legitimate the taxpayer pays the tax owed after the court case which, in effect is a low interest loan.

Any scheme which is considered to be high risk by HMRC will be listed. Users of the listed schemes would have to either have to pay the tax due before any court case or pay the tax due after the case, along with extra charges if the scheme is proved not to work. However, HMRC already charges a penalty if the scheme is found to be implemented incorrectly, plus interest which is payable from the original date the tax was due.

A large number of advisers may consider this unfair as users of listed schemes will be charged tax whether or not the court finds in their favour or for HMRC.

About The Author

Gary Fields

Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.

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