Chancellor George Osborne revealed in his Budget 2014 speech that HM Revenue & Customs (HMRC) is collecting almost twice as much tax since the government invested £900 million in tackling tax avoidance.
But Osborne wants to make that even more revenue for the Treasury by tightening the screws on wealthy individuals and companies considered as trying to deliberately hide cash offshore or in dubious tax avoidance schemes.
Part of the fight, Osborne told MPS, was Britain playing a lead role with the US in developing an international tax information swapping network through the US Foreign Account Tax Compliance Act (FATCA) and a similar network under the Organisation of Economic Co-Operation and Development (OECD).
Osborne confirmed the number of tax avoidance schemes registered with HMRC has dropped by around 50%.
New powers for HMRC
“While the vast majority of wealthy people pay their taxes, there is still a small minority who do not,” he said.
To encourage prompt tax payment, Osborne announced:
Any taxpayer signing up to disclosed tax avoidance scheme will have to pay their taxes up front. The current system will be reversed, so taxpayers will have to go to a tribunal to prove the scheme is valid – and if they win they get their money back with interest.
The government expects this change to raise an extra £4 billion in taxes.
New laws are also on the way to stop companies shifting profits between companies to avoid tax.
Tax penalties and surcharges will also increase, with the better-off paying more.
HMRC will also get powers to raid private and business bank accounts for unpaid tax.
Stopping tax abuse
New rules are also in the pipeline to block Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) investment schemes.
Lastly, the Chancellor is extending stamp duty on homes bought with companies – especially those based offshore.
From midnight, companies will pay 15% stamp duty on any home bought over the value of £500,000, a significant lowering of the bar from the current £2 million. However, rented homes will be exempt.
“If people feel they’ve been wronged, they can of course go to court. If they win, they get their money back with interest,” said Osborne.
“The public tolerance for those who do not pay their fair share evaporated long ago – but we’ve had to wait for this government before there was proper action.”
