Graham Webber, head of professional relations at Rebus, said HMRC has successfully raised public awareness of the potential financial implications of investing into tax avoidance schemes, and should now be “magnanimous” in its victory.
“Perhaps the time has come for the Revenue to offer a tax amnesty in the same nature as the Liechtenstein Disclosure Facility,” he said. “It should give investors who did not know what they were buying into a chance to say ‘I didn’t know what I was doing,’ and let them get on with their lives.”
He said that HMRC should “show some grace” and increase its flexibility when allowing people to settle, rather than taking a “hard line which works in its favour” when calculating repayments.
“[HMRC] is not going to encourage people to come in and settle and people are more likely to fight than pay the full price they are given, which is opposite to the government policy of getting the public to pay the correct amount of money.”
He said many investors had become “caught between a rock and a hard place”, unable to pay both the amount demanded by HMRC and the price of litigation, which has become their only option in the absence of a settlement.
“There has been a revolution in the Revenue’s attitude towards tax avoidance, and it is yet to define what it means when it says the public should pay a ‘fair’ amount of tax,” he said. “It seems correct that people should pay the right amount of tax, but many investors into avoidance schemes are finding themselves in situation where they are being forced to pay an ‘unfair’, or incorrect, amount”.
He added that investors were not the only victims of HMRC’s crackdown, as many providers who “actually cared” about what they had invested in have been equally surprised by how far the body’s “avoidance crusade” has gone, and the implications it has had on their schemes.
“I don’t think anybody in the nineties could have predicted the changes that have occurred in attitudes towards tax avoidance.”
His comments come after HMRC was last month granted Royal Assent to subject promoters of tax avoidance schemes to conduct and monitoring notices, as well as allowing them to “name and shame” those who fail to provide adequate information.
It will also now be able to issue follower notices where it considers principles established in one case as apposite to another, and can require individuals to pay disputed tax in advance of agreeing the final position in a case.