Tax schemes targeted

HMRC has announced an opportunity for participants in certain tax avoidance schemes to settle their affairs and pay the tax due, or face the prospect of costly litigation.

The taxman aims to contact all participants by the end of January 2013.

HMRC said that taxpayers making use of film partnership sale and lease back schemes; and interest relief schemes which result in a claim to interest relief under S353(1) ICTA 88 - which is used as a deduction against general income - will not be included in the current campaign.

It follows the government's announcement earlier this month that it would provide an additional £77m to HMRC to help it clamp down on tax avoidance and evasion.

A spokesman for HMRC said: ‘Following this announcement, we are inviting some participants in certain schemes to settle their tax liabilities by agreement, without the need for litigation.

‘We believe that this settlement opportunity offers both the taxpayers and HMRC the best opportunity to resolve these disputes in a way which is cost-effective and consistent with the law.

‘Where people decline the settlement opportunity, we will increase the pace of our investigations and accelerate disputes into litigation.

‘We aim to contact all those who are eligible for the offer by the end of January 2013,’ HMRC said.

The settlement opportunity is made in accordance with HMRC's Litigation and Settlement Strategy.

HMRC said it will advance all available arguments if disputes are litigated.

‘As well as continued uncertainty, delay in resolution, additional costs and potential reputational damage, taxpayers who choose the litigation route may end up with a worse tax result than they would obtain under the settlement opportunity’, the spokesman added.

While full details have yet to be released, HMRC said the settlement opportunity will be offered to participants in ‘schemes which seek to use Generally Accepted Accounting Practice (GAAP) to write off expenditure or the value of assets to create losses either for sole traders, or individuals or companies in partnership’ and ‘schemes seeking to access the film relief legislation for production expenditure’.

Another option is for ‘schemes seeking to create losses in partnerships through reliefs such as first year allowance, payments made for restrictive covenants, specific capital allowances’.