The Government and HMRC are determined to continue to tackle promoters of tax avoidance schemes. HMRC undertake a variety of activities such as changing promoter behaviour using the Promoters of Tax Avoidance Schemes (POTAS) regime; challenging promoters for failures under the Disclosure of Tax Avoidance Schemes (DOTAS) regime and pursuing criminal investigations and arrests where appropriate.
In December 2019 the Government announced in its response to Sir Amyas Morse’s Independent Loan Charge Review further measures to tackle promoters of avoidance schemes. Further detail on these measures will be set out at the Budget.
At Budget 2016 it was estimated that 50,000 individuals would be affected by the loan charge. As a result of the changes announced by the Government in December 2019, it is estimated that around 11,000 will now be taken out of scope of the loan charge altogether. In addition, individuals who have settled or are settling their tax liability with HMRC will also be out of scope of the charge. There is not yet a firm estimate of the number who will choose to settle and so be out of scope of the loan charge.
The Government accepted all but one of the recommendations of the Independent Review. The recommendation to introduce a write-off of tax due on the loan charge after 10 years of a time to pay arrangement, was not accepted. This would treat tax avoiders more favourably than other individuals with HMRC debts (including tax credit claimants), would reduce taxpayers’ incentive to pay off the debt, and would have unwelcome wider impacts that change how HMRC and those in debt interact.
A copy of the Government response can be found at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/854490/20191219_Government_response.pdf