If you have been involved in a marketed tax avoidance scheme in the past 10 years or more, and your case is not yet settled, you would be well-advised to consider embarking on a negotiated settlement with HMRC.
Whist formal settlement opportunities – which were on offer at various times until 2015 – have now lapsed, our experience in the last 18 months or so is that taxpayers voluntarily seeking to settle with HMRC will receive a fair hearing in relation to the two key elements – penalties and time to pay.
Often the scheme promoters will either have disappeared altogether or be advising strongly against any attempt to settle. Given the clear conflict of interest for promoters, taxpayers in this situation ought to seek independent advice.
On Employment Benefit Trusts (EBTs), the Rangers case reaches the Supreme Court in March 2017 with a decision expected no later than the autumn. In any case, there will be legislation in place by 5 April 2019 to tax any older EBTs where loans have been advanced and not repaid by that date.
The legal process in relation to HR schemes which have been challenged, such as K2, is less advanced and has still to reach the First Tier Tribunal; however we have already seen HMRC pass the HR scheme of a well-known offshore provider to its Fraud Investigation Service (FIS), a move which could carry serious repercussions for individuals and their companies. It remains to be seen if any other scheme providers or promoters are referred to FIS to “fast-track” the process.
For many business owners, the “hanging chad” of historic tax avoidance schemes hampers their ability to take their business forward and/or make key decisions. Entrepreneurs prefer certainty – even if there is some pain in reaching that goal.
If you have an outstanding tax avoidance case, don’t just rely on what the promoter or provider says; do seek independent advice and seriously consider pursuing a negotiated settlement with HMRC.