Warning creators and users of UK tax optimization schemes

12.08.2013

The UK government is in the process of discussing a number of legislative developments relating to schemes of tax evasion. Namely, the question is about actions against activities of so-called high-risk promoters.

In light of these events, the UK HM Revenue and Customs (HMRC) has published a warning to users of tax optimization schemes. Warning related to two aspects: first, the behavior of the above high-risk promoters, and, second, the penalties for users of unsuccessful tax avoidance schemes. At this stage HMRC does not have the power to name promoters with high-risk behavior. But now the question is about how to give it such a power, which later will allow them to identify publicly and enable users to distinguish high-risk promoters from the ordinary one.

Intended to introduce a procedure wherein a tax promoter notify HMRC about the tax optimization scheme, which he is going to offer to the client for the implementation. HMRC, in turn, issues a registration number. Thus, it is assumed that such registration number will give a notice to potential customers about the high risk which they take upon themselves. HMRC also reminded directors, that they are personally liable for the debts and expenses that may arise on the application of these high-risk schemes of tax evasion. Those businessmen, who use "too favorable tax avoidance schemes", should think about their business reputation.

Based on: http://www.hmrc.gov.uk/

Expert’s opinion

Form and essence. To be more exact - the contradiction between them. That's the first thing to be noted.

On the one hand it looks like combating measures. Numbers will be given and “penalties for users of unsuccessful tax avoidance schemes”. And what are the criteria of “felicity”?

That is, who will have a “successful” tax avoidance scheme have nothing to fear?

On the other hand – those, “who use “too favorable tax avoidance schemes”, should think about their business reputation”, and that’s all?

Explicit criteria is only one: “too favorable scheme”. It means that those tax promoters who will receive the mark from HMRC - by default will be the most favorable scheme?

So this is advertising!

In general, one thing is clear - it's time to go from wild to civilized, accepted all over the world, tax optimization schemes.

Yaroslav Lomakin ( Managing partner of “Honest&Bright” company)