HMRC's new campaign 'Spot the signs of tax avoidance' aims to raise awareness of tax avoidance schemes and highlights how to spot one and the negative effects of using one, in an effort to curb take up and promote reporting.

HMRC's latest strapline is "Stop, challenge, protect": 

Stop

Always take time to fully understand what you are signing up to. The person selling the scheme should be able to clearly explain how it works. You are ultimately responsible for your tax affairs so do not sign anything that does not seem right or is unclear. If in doubt seek independent professional advice.

Challenge

Do the claims of the scheme seem to good too be true? They probably are. Look out for:

  • Not paying as much tax as you would expect on the full amount of money received:
    • Not all payments received are classed as income.
    • Receiving non-taxable payments such as loans, advances, capital payments.
  • "Approved' by HMRC". HMRC do not approve schemes of any kind. Any registration number given may be from the Disclosure of Tax Avoidance Schemes (DOTAS) register.
  • A choice between a standard scheme and an enhanced (more tax-efficient) one. The latter is likely to be tax avoidance.
  • Multiple contracts or agreements may be a sign of tax avoidance arrangements.
  • Contracts that do not state how you will be paid and what deductions will be taken from the income.
  • Cash bonuses for referrals.

Most payments received in relation to employment or work undertaken will be income regardless of how they are categorised and they will be subject to Income Tax and National Insurance Contributions (NICs).

Protect

Report any suspicions to HMRC. If you believe that you are already in a scheme and want to leave, again you can contact HMRC who will help you.

Useful guides on this topic

Tax avoidance schemes 
What does tax avoidance look like? What legislation can HMRC use to target schemes? What are common arrangements caught by the legislation?

Ten things you need to know about tax avoidance 
HM Revenue & Customs (HMRC) have published a list of ten things you need to know about tax avoidance (that scheme promoters won't always tell you). 

External Links

HMRC: Spot the signs of tax avoidance

Comments (0)

Rated 0 out of 5 based on 0 voters
There are no comments posted here yet

Leave your comments

  1. Posting comment as a guest.
Rate this post:
Attachments (0 / 3)
Share Your Location

 

Enjoying the Practical Tax content on www.rossmartin.co.uk? 

Sign up now to receive a unique FREE Tax Planning Tips and Advice Guide & our FREE Newsletter.

.Squirrel ad