UK Announces Comprehensive Tax Compliance Plan |
(This article is sourced from Step Journal and we put it here only for our internal study and research. If it infringes the author’s copyright, please send e-mail to This e-mail address is being protected from spambots. You need JavaScript enabled to view it , and we will delete it immediately.)
UK Chancellor George Osborne has announced several initiatives designed to crack down on tax avoidance as he struggles to control the deficit and contain the growing criticism over the tax treatment of multinational corporations. The announcement comes prior to the Chancellor’s Autumn Statement this week and after the Public Accounts Committee (PAC) issued a critical report on HM Revenue and Customs’ (HMRC’s) ability to deal with large corporations which generate significant income in the UK but appear to pay little or no tax there. Companies such as Starbucks, Amazon and Google have been targeted by the PAC due to several hearings during which their tax affairs were exposed and categorized as immoral. At the same time, HMRC’s response to the situation was criticized as too lenient and lacking determination. In order to take hold of the situation, the Treasury will grant GBP77m to HMRC so that it can focus on offshore evasion and enforcement on wealthy individuals and multinationals, particularly adding staff and legal support to speed up work on transfer pricing arrangements, and to further strengthen HMRC’s risk assessment capability across the large business sector. This should eventually raise GBP2bn per year in tax that would have otherwise gone unpaid, according to the Treasury. The goal of these initiatives is to ensure that multinationals do not move profits out of the UK to lower tax jurisdictions, but pay the tax due in accordance with UK tax law. A new “center of excellence” will be set up within HMRC to look at how the department can best use data to identify offshore tax evasion. The HMRC’s Affluent Unit will also expand, adding 100 investigators and additional risk and intelligence staff to target avoidance and evasion by the wealthy. The number of specialist personal tax inspectors will also increase in order to tackle offshore evasion and avoidance of inheritance tax using offshore trusts, bank accounts and other entities. The inspectors will focus particularly on agents and tax intermediaries. The Chancellor also announced an agreement with the US, the first of its kind, which will significantly increase the amount of information on potentially taxable income automatically exchanged between both countries and further enhance HMRC’s ability to tackle offshore evasion. Additionally, measures will be taken to close in on marketers of aggressive tax avoidance schemes, such as the introduction of new information disclosure rules and HMRC sanctions for advisers who sell said schemes. The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances. Published on our website on December 10, 2012
|