Tax avoidance: don’t get caught out – educational campaign from HMRC
10 December 2020
As recently published on CIPP’s News Online page, HMRC is running a ‘Tax avoidance: don’t get caught out’ educational campaign. This is aimed at contractors who are either self-employed or employed through an agency, and its aim is to advise them of how to identify a tax avoidance scheme, what the risks are of taking up such a scheme, and what to do when presented with one.
What is a tax avoidance scheme?
In a tax avoidance scheme, tax rules will be bended in an attempt to gain a tax advantage that was never intended.
It ordinarily involves contrived transactions that have no genuine purpose other than to artificially reduce the amount of tax that an individual is required to pay. It is not the same as effective tax planning but is often promoted in this way.
Tax avoidance does not pay, as the majority of schemes do not work. Anyone who utilises them ends up having to pay all the tax legally due, in addition to interest and potentially penalties as well. This is on top of fees paid to the person or business operating the tax avoidance scheme, so the end result is that they often find themselves paying more than they tried to avoid in the first place.
Individuals are responsible for ensuring that they are paying the correct amount of tax under UK law, even in scenarios where somebody else does this for them or if they have been given bad advice.
In not paying the correct amount of tax, this reduces money put towards public services, such as schools and hospitals.
Why are contractors being targeted by the campaign?
HMRC’s aim is to help people to steer clear of tax avoidance, and to encourage contractors not to be duped by tax avoidance schemes. Schemes that claim to increase net pay and reduce tax bills are ones that contractors should be especially wary of, and the resounding message is that if something looks to good to be true, it almost certainly is.
CIPP comment
HMRC is seeking feedback on its ‘Tax avoidance: don’t get caught out’ campaign. Please send any comments you may have to the Policy team, at [email protected]. Thank you in advance.
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