In the past few years, there has been a steady increase in tax avoidance schemes, which are devised to bend tax laws in such a way that changes the intention of the original legislators. In response to this, HMRC is cracking down on avoidance schemes and taking an increasingly strong stance on borderline tax evasion activities.
WHAT IS TAX AVOIDANCE
Avoiding tax is the deliberate arrangement of one’s finances using legal methods to lower tax liability. Unlike tax evasion, avoidance, if done correctly, is technically legal. Many individuals and companies use strategic tax planning to navigate around certain tax requirements in order to pay the least amount of tax possible.
What Type of Avoidance Schemes HMRC Review
employment benefit trusts
HMRC regularly review tax schemes suspected of being damaging and often close them down. It is important to be aware that any schemes you may take part in, including Employee Benefit Trusts (EBTs) and Employer Finance Retirement Benefits Scheme (EFRBS) have been deemed illegal and anyone taking part in these schemes will be investigated and penalties will apply.
Other avoidance schemes
Stamp Duty Avoidance, Car benefit Scheme, Share Loss Scheme, Gift Aid Avoidance, VAT Supply Splitting are few of the other schemes subject to continuous and rigorous challenging from HMRC. You should make the appropriate disclosures and decisions regarding your tax returns to ensure you mitigate any resulting additional taxes and penalties.