Getting tough on share sales – latest HMRC action incoming

The Chartered Institute of Taxation (CIOT) have published details of an HMRC briefing stating that they have undertaken a project reviewing declared proceeds from share sales in 2019/20 Self-Assessment tax returns, against the values declared by purchasing companies. This is seen as an area of tax risk by HMRC, and they have the information available to investigate and challenge the declared values of share sale proceeds.

HMRC will be sending ‘nudge letters’ to those where a discrepancy is identified, as part of its one-to-many strategy. HMRC receives data from a vast number of sources and believe that the use of nudge letters provides it with a cost-effective approach to communicate with many taxpayers.

Nudge letters are a targeted communication from HMRC to a large group of taxpayers. HMRC’s nudge letters to date have either identified a potential loss of tax or, more broadly, are used as an educational exercise.

It is worth noting that representatives do not always receive a copy of these communications from HMRC. The communications are aimed at encouraging taxpayers to review their own tax affairs and voluntarily correct any errors or omissions. Our experience has shown that there can be inaccuracies with some of the information held by HMRC, or it has been interpreted incorrectly.

This latest HMRC nudge letter will contain an invitation to make a disclosure for those who agree that the tax return contains an inaccuracy, or a written response from those who are happy the information in their tax return is correct. Caution is advised here: if an error is found later, HMRC may use the written confirmation as evidence of deliberate or fraudulent behaviour in penalty negotiations.

HMRC is expected to take further action against those who do not respond, which may include discovery assessments or other compliance action, and could carry higher penalties.

We recommend reviewing declared share sales in 2019/20 and seeking professional advice should there be a discrepancy. A voluntary unprompted disclosure, ahead of the receipt of any letter, would benefit from the lowest available penalties. We expect HMRC to undertake similar projects in tax years going forward.

Should you require any professional advice please contact our head of tax disputes and resolutions, Danielle Ford.

The full publication can be found here.

Marketing Manager – Services

Marketing

  • End to end management for in-person, virtual and hybrid events
  • Research, negotiate and manage key sponsorships
    • Leverage key sponsorships which provide access to our target markets
    • Leverage events to create opportunities for relationship development/sales dialogue
    • Alongside the Marketing Managers and Head of Marketing and Business Development, create an evaluation matrix for sponsorships and apply for all relevant sponsorships
  • Responsible for the management of target lists. Ensure information is up to date with a clear action plan in place.
  • Marketing representative for service line meetings
  • Pitch relevant and topical themes for the events and communication schedule
  • Liaise with the Marketing team to ensure communications and events are executed to plan
  • Produce ROI reports for all events and communications, which are aligned to the strategy
  • Working with the Marketing Managers and Head of Marketing and Business Development, map out BD plans for the financial year
  • Budget management including an assessment of cost vs. benefit of all activity to ensure that resources are used in an efficient and effective manner
  • Supporting the Head of Marketing and Business Development on the overall marketing strategy.

Projects

  • Responsible for the service line client care programme
  • Campaign management:
    • End-to-end management of campaigns, including planning, preparations, launch and close
    • Budget management
    • Reporting on results and ROI
  • Management of the service lines key account programme
    • Working with the Head of Marketing and Business Development, implementation a plan to target the department’s key clients. Identify which are the most appropriate clients for growth and cross selling opportunities.

Bids

  • Evaluate the commercial viability of service line bid opportunities and make justified recommendations as to whether opportunities should be pursued.

Major Sporting Events (Income Tax Exemption) Regulations 2022 for summer

1. Finalissima football match – SI 2022/487

The Finalissima football match between Italy and Argentina is due to be held at Wembley Stadium on 1 June 2022.

SI 2022/487 will come into force on 27 May 2022. The Income Tax Exemption will be available from 28 May 2022 until 2 June 2022 and only applies to individuals within the meaning of an accredited person. The individuals must be non-UK resident in the 2022/23 tax year or, if split year treatment applies, the income must relate to the overseas part of the tax year.

2. UEFA Women’s EURO 2022 finals – SI 2022/489

The UEFA Women’s Euro 2022 finals tournament is due to be held in England in July 2022.

SI 2022/489 will come into force on 30 June 2022. The Income Tax Exemption is available from 1 July 2022 until 6 August 2022 and only applies to individuals within the meaning of an accredited person. The individuals must be non-UK resident in the 2022/23 tax year or, if split year treatment applies, the income must relate to the overseas part of the tax year.

3. Birmingham Commonwealth Games – SI 2022/493

The Birmingham Commonwealth Games will take place from 28 July 2022 to 8 August 2022.

SI 2022/493 will come into force on 30 June 2022. The Income Tax Exemption is available from 1 July 2022 to 11 August 2022 and applies to duties or services in connection with the Birmingham Commonwealth Games which are performed by an accredited person in the UK during this period. The individual must be a non-UK resident in the 2022/23 tax year or, if split year treatment applies, the income must relate to the overseas part of the tax year.

If you require further information, please contact Danielle Ford, Director and Head of Tax Disputes & Resolutions.

Penalties for facilitating avoidance schemes involving non-resident promoters

Following our Tax Disputes and Resolutions team’s recent article in Taxation ‘HMRC’s power to publish information about avoidance schemes’ Finance Act 2022, s 86 (read the full article here), HMRC has published guidance on penalties for facilitating avoidance schemes involving non-resident promoters, Finance Act 2022, s 91 schedule 13.  The legislation introduces a new penalty that is to be applied to UK entities who facilitate tax avoidance schemes involving non-resident promoters.

The penalty will be up to 100% of the total fees or equivalent thereon received by all entities involved in the promotion of the avoidance scheme

This is part of HMRC’s wider focus on clamping down on promoters.

Tackling tax avoidance schemes involving offshore promoters has proved a challenge for HMRC.  The new penalty is a positive step to tackle non-resident promoters of tax avoidance schemes.

The new penalty together with POTAS and Enablers penalties and the publication of information to identify promoters will act as a greater deterrent to UK entities from promoting such schemes.

For more information, please do not hesitate to contact Danielle Ford, Head of Tax Disputes and Resolutions.

HMRC settlement opportunity – Remuneration Trust Tax Avoidance Schemes

On 11 April 2022 HMRC announced a settlement opportunity for companies or individuals who have used certain tax avoidance schemes involving remuneration trusts. The settlement opportunity will be open for applications until 31 July 2022.

The settlement opportunity is available to individuals or companies only, whose scheme meets certain criteria detailed in the settlement publication. Individuals or companies under criminal investigation by HMRC are not eligible, and it may not apply if an appeal related to the tax consequences of a scheme has been referred to a tribunal, as a court may rule in the future that tax is due on an alternative basis and the settlement terms will be withdrawn.

Remuneration trusts do not just relate to employment remuneration; the structures include funds from companies and self-employed individuals. Due to the wide spectrum, each case is reviewed on the facts.

HMRC state “remuneration trust schemes do not work to deliver the ‘tax free’ environment they claim. Settling will give you certainty over your tax affairs regarding the arrangements and prevent further investigations”. HMRC have advised the settlement terms are likely to result in a lower tax bill for scheme users, than alternative outcomes that the courts might reach.

Reaching a settlement with HMRC will result in a legally binding full and final settlement. Whilst the settlement agreement will preclude HMRC from taking any future action against you, you will be unable to take any actions or make future claims in respect of this matter. Each case depends on the user and structure thereon, we recommend seeking professional advice before agreeing settlement with HMRC.

To apply for the settlement opportunity

HMRC require the taxpayer to:

  • Follow the settlement terms to decide which settlement basis applies
  • Prepare the tax calculations
  • Submit the completed calculations to HMRC before 31 July 2022

Should you decide not to settle by 31 July 2022

HMRC will continue to investigate and litigate against users of remuneration trust avoidance schemes. They have advised that users may find that it is more expensive to close any of your open enquiries formally than it is to settle under this opportunity.

Interest will continue to accrue on any outstanding tax liabilities until the liability is settled in full. HMRC charge late payment interest, set at 2.5% above the Bank of England base rate, currently 3.5%. Some tax avoidance schemes have been around for a number of years and the interest rates prior to 2009 were considerably higher than today.

Cashflow issues

HMRC will agree a Time To Pay (TTP) arrangement based on the taxpayer’s individual circumstances.

As with other settlement opportunities, HMRC have advised terms for individuals who do not have disposable assets and have income less than £50,000 in the year of settlement. Terms include:

  • Arrangements will be agreed for a minimum of five years for individuals who have income less than £50,000 in the year of settlement
  • For a minimum of seven years for individuals who earn less than £30,000 in the year of settlement.

HMRC will ask for income and expenditure information for those earning more than £50,000 or require longer than the minimum term to pay,.

Forward interest will be added for the duration of the TTP arrangement. Forward interest is charged at 1% above HMRC’s late payment interest rate and is to compensate HMRC for the extra risk in agreeing the extended payment period.

We are here to help

With an in-depth knowledge of tax avoidance schemes, we can guide you through the process in its entirety, including:

  • Understanding your structure
  • Outline what HMRC’s settlement opportunity means for you
  • Should you wish to settle, prepare and submit the settlement calculations to HMRC
  • Liaise with HMRC on your behalf
  • Discuss the funding of the settlement liability with you
  • Agree a payment plan with HMRC
  • Finalise your agreement with HMRC

For more information, please do not hesitate to contact Danielle Ford, Head of Tax Disputes and Resolutions.

Disputes with HMRC

We appreciate how daunting a dispute with HMRC may feel, with an individual or a company going against an entire government department, however we also appreciate HMRC make mistakes and the importance of defending your position, and the potential financial costs of not doing so.

Where such a dispute arises, our experienced team are best placed to assist.  We hold a detailed knowledge of HMRC’s powers, guidance and tax legislation, with a proven track record in successful arguments defending our clients’ positions.

Should a dispute need to be escalated to the next stage for any reason we can advise on the most effective way of doing so, communicate direct with HMRC and guide you with the process.

 

HMRC settlements

Settlements can cover a broad range of historic tax matters, most topical at the present time are those in respect of taxpayer investments which HMRC perceive to be tax avoidance schemes.  These include but not limited to film partnership structures, offshore structures, disguised remuneration – ‘contractor loans’, EBTs, umbrella companies.

HMRC are focussed on attacking such investments through their counter-avoidance department and legal action through the courts.  Such action is protracted, causing stress and worry for the taxpayers involved.

Settlement opportunities offer individuals an ‘out’ – a chance to enter into a mutual settlement with HMRC in order to provide finality.  Normally this is in exchange for payment of tax due plus late payment interest.

Our approach – we will review all of the available information to advise the best course of action, with regards to your personal circumstances.

 Our focus is you, we communicate direct with HMRC on your behalf and keep you fully to do date each step of the way.  We understand settling with HMRC will impact on cashflow, payment arrangements form part of the settlement process.

Disclosures

Settlements can cover a broad range of historic tax matters, most topical at the present time are those in respect of taxpayer investments which HMRC perceive to be tax avoidance schemes.  These include but not limited to film partnership structures, offshore structures, disguised remuneration – ‘contractor loans’, EBTs, umbrella companies.

HMRC are focussed on attacking such investments through their counter-avoidance department and legal action through the courts.  Such action is protracted, causing stress and worry for the taxpayers involved.

Settlement opportunities offer individuals an ‘out’ – a chance to enter into a mutual settlement with HMRC in order to provide finality.  Normally this is in exchange for payment of tax due plus late payment interest.

Our approach – we will review all of the available information to advise the best course of action, with regards to your personal circumstances.

Our focus is you, we communicate direct with HMRC on your behalf and keep you fully to do date each step of the way.  We understand settling with HMRC will impact on cashflow, payment arrangements form part of the settlement process.

Code of Practice 9

An outline disclosure needs to be made to HMRC within 60 days of the COP 9 enquiry commencing. This needs to contain as much detail as possible about all deliberate and non-deliberate tax irregularities and this document is of paramount importance as only irregularities disclosed here will be immune from criminal prosecution. Following this, an in-depth meeting will be held with HMRC to discuss the outline disclosure and in most cases a full disclosure report will be commissioned after this, in which all irregularities will need to be fully explained with supporting evidence and disclosed to HMRC.

Taking professional advice in relation to Code of Practice 9 is essential, given the fine margins which could lead to a criminal prosecution for an incomplete or incorrect disclosure. Our team includes a former HMRC Fraud Investigation Service (FIS) senior inspector who can offer unique insight into the process. We have a wealth of COP 9 experience, helping our clients achieve their main aim of avoiding criminal prosecution but also assisting in negotiating a more favourable settlement in terms of penalty rates and payment arrangements.

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