Chancellor pledges to provide extra operational funding to HMRC following loan charge review

THE Government plans to flex its muscles to help HMRC get tough with the people behind tax avoidance schemes.

In the Budget, Chancellor Rishi Sunak also revealed that the Government will publish a “call for evidence” on raising standards for tax advice.

The Budget also confirmed that the Government’s response to Sir Amyas Morse’s independent loan charge review will be legislated in the Finance Bill.

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In December, the Government said it planned to implement changes to the loan charge, after Sir Amyas’s review found that it caused “serious distress” to some of the people affected by it.

Rishi SunakRishi Sunak
Rishi Sunak

The review was commissioned to look at the impact of the charge, which was introduced to tackle what the Treasury described as “disguised remuneration schemes”.

Sir Amyas, the former head of the National Audit Office, has confirmed the schemes were a form of tax avoidance but made a series of recommendations about the design of the charge and its impact on those in its scope.

Responding to the review, the Budget said: “To implement the changes, the Government will also provide HMRC with additional operational funding. However, disguised remuneration schemes continue to be used. Therefore, the government will shortly issue a call for evidence on further action to stamp out these schemes.”

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As announced in the Government’s response to the independent loan charge review, the Government will legislate to take further action against those who promote and market tax avoidance schemes.

The statement added: "The legislation, which will take effect following Royal Assent, will allow HMRC to obtain information about the enabling of abusive schemes as soon as they are identified by strengthening information powers for HMRC’s existing regime to tackle enablers of tax avoidance schemes."

The legislation will ensure enabler penalties are felt "without delay" for multi-user schemes, meaning anyone enabling tax avoidance arrangements that are later defeated will face a penalty of 100 per cent of the fees they earn.

It will also enable HMRC to act promptly where promoters fail to provide information on their avoidance schemes.

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In particular, these changes will help HMRC to obtain the information needed to bring a scheme into the Disclosure of Tax Avoidance Schemes regime and empower HMRC to act faster where avoidance schemes are being promoted.

The Chancellor has also pledged to equip HMRC so it can more effectively stop promoters from marketing and selling avoidance schemes as early as possible.

On top of the legislative changes, HMRC will publish a "new ambitious strategy" for tackling the promoters of tax avoidance schemes.

The Budget added: "This will outline the range of policy, operational and communications interventions both underway and in development to drive those who promote tax avoidance schemes out of the market, disrupt the supply chain to stop the spread of marketed tax avoidance, and deter taxpayers from taking up the schemes."

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The Government will publish a call for evidence in the spring on raising standards for tax advice.

The statement added: "This will seek evidence about providers of tax advice, current standards upheld by tax advisers, and the effectiveness of the government’s efforts to support those standards, in order to give taxpayers more assurance that the advice they are receiving is reliable."

In a post on Twitter, the Loan Charge All Party Parliamentary Group, which has more than 200 members, said: "The forthcoming Finance Bill, which will enact the measures announced in Budget 2020 will include changes to the loan charge legislation as laid out in the Treasury response to the Morse Review.

"We believe these aren’t adequate and don’t address the injustice and will push for more."

On Thursday March 19, MPs will debate a motion on the Government’s response to the Morse review.