Tough tax avoidance policy leads to higher tax receipts

HM Revenue and Customs (HMRC) has confirmed its tough policy on tax avoidance has resulted in additional tax receipts totalling £400m in 2016.

The tax authority’s increased focus on tax avoidance schemes led to the HMRC Counter Avoidance Directorate collecting £886m from those who had attempted to avoid paying tax owed by signing up to these such schemes, according to data released following a freedom of information request.

This figure amounts to an 80% increase on the £494m tax receipts recouped in the 2014-15 financial year.

HMRC has taken an increasingly hard line approach to tax avoidance in the last two years. Its implementation of “Accelerated payment notices” (APNs) in 2014 now require recipients to pay tax owed within a 90-day window.

The Finance Bill, set to be implemented in 2017, will also feature more stringent penalties for accountants and advisers who promote unethical avoidance schemes.

Within the Autumn Statement 2016, Chancellor, Philip Hammond forecast additional revenue of £2bn for the Government with its new anti-avoidance measures.

An HMRC spokesman said the Government was “very successful” at defeating such schemes.

“Avoidance schemes are often highly contrived and almost invariably fall flat when trying to deliver a tax advantage never intended by Parliament.

“The fact is the majority of schemes simply don’t work and can put avoidance users in a significantly worse financial position than if they had never used the scheme in the first place.”

Last updated: 30th December 2016