In a wide ranging speech to PfP’s annual tax investigations conference, HMRC’s permanent secretary Edward Troup said that this focus was one part of its strategy to tackle tax avoidance, and that there would be no let-up in its investigations.
Troup made it clear that in his view the use of some salary sacrifice schemes where an employee gives up some of their salary in return for a benefit, such as childcare vouchers, cycle to work, or green car schemes, is straying close to avoidance.
HMRC’s stance is that a salary sacrifice scheme would not be “effective” if the employee continues to be entitled to the higher level of cash remuneration in the future having stated they are taking a salary sacrifice.
Troup also said that HMRC would tackle avoidance through an increase in the use of ‘nudge’ campaigns designed to encourage better behaviour by the taxpayer.
Recent campaigns included ‘My Tax Return Catch Up Plan’, which was aimed at taxpayers who have received a tax return or notice to file a return for years up to and including 2011-12 and had not acted.
Kevin Igoe, PfP managing director, said: “Tax agents should be prepared for an increase in enquiries as HMRC steps up its pursuit of tax avoidance.”
He added that HMRC is clearly on the lookout for those seeking to abuse salary sacrifice arrangements by using it as a cover for a complex tax avoidance scheme, and that this is an area where HMRC may step up compliance action if it feels abuse is growing.