Tax avoidance used to be tolerated by the Taxman. This is because the Taxman was more concerned in dealing with those who are guilty of intentionally doing it before. However, HMRC is now after tax dodgers in the likes of politicians, celebrities and even small businesses.
HMRC investigations have resulted in the collection of an additional £3.4bn in VAT underpayment in 2016/17 and will continue its scrutiny of small and medium tax returns.
It is possible that businesses are less educated about tax avoidance or its probable implications. Therefore, educating them would be a high priority for accountants.
Here are the essential points to remember:
- HMRC is becoming firm when it comes to schemes that help small businesses reduce their tax liability and will immediately be subject to investigation.
- Government is advising people to be cautious of the different schemes. These schemes usually have substantial benefits with very little cost and are usually paid in a form of loan. Also, any scheme that asks clients to move their money out of the country should be instantly avoided.
- Organisations that claim to have Scheme Reference Number (SRN) are fraud. They are not HMRC approved and will more than likely get your business in trouble.
- Ignorance and misunderstanding will not be tolerated by HMRC. It is the business’ responsibility that they are well-informed and aware of the tax avoidance schemes they are getting into.
Clearly, getting involved in an unreliable tax avoidance scheme is not worth the risk. If you are caught in doing so, you will not only get a hefty tax bill but will also be asked to pay the full amount of tax upfront. You will also be responsible for covering legal fees and penalties.
Moreover, you will be under the scrutiny of HMRC ceaselessly and prosecution and possible conviction may also likely to take place.
As accountants, we are always available to give you professional advise and will help you focus on the legal and ethical ways to reduce your tax bills.
If you are unsure of the tax avoidance scheme you are getting into, please contact our office on 01772 788200 or email firstname.lastname@example.org.