By Brian Collett — The UK tax authority HM Revenue & Customs has collected a total of £3bn ($3.64bn, €3.32bn) in two years from users of avoidance schemes.
In the latest case the Court of Appeal ruled against the consultancy NT Advisors, which had claimed tax relief for 304 UK clients using its scheme and had gone to law to dispute HMRC’s rejection of those claims.
The court decided the scheme consisted of circular payments intended to generate tax deductions with no genuine commercial purpose. The result was a £143m gain for the tax authority.
This case is the tenth in succession in which HMRC has defeated a challenge from Argentina-based NT Advisors.
At a time when corporates including Amazon, Starbucks and Google are under fire for legally but immorally dodging tax on UK earnings by basing themselves in low-tax regimes, HMRC says it is exposing companies using devices not intended by
Parliament for avoidance and has had its decisions endorsed in court.
HMRC is publicising its victories and, partly as a result, it believes there is now “less appetite” for avoidance than two or three years ago.
No new legislation is known to be in the pipeline to clamp down on corporate tax avoiders, but HMRC’s efforts and public disapproval of big business tactics appear to be working, said Graeme Bone, an adviser with the UK financial advice consultancy Beaufort Asset Management in Reading, Berkshire.
Bone then strikes a note of caution. He observes that part of the problem is that if a government wants to change tax policies it feels duty-bound at the same time to protect the rules that honest taxpayers use legitimately to minimise their bills.
The increasing complication of the rules over the years adds to the dilemma.
These factors may explain why the government is wary of strengthening the law against avoidance.
Most corporates, of course, pay their dues in a proper fashion. Accusing fingers have never been pointed, for example, at large high-profile businesses such as the food manufacturer Unilever, the Costa coffee bar chain or the giant Sainsbury supermarket group.
Meanwhile, another offensive may be looming in the campaign against the dodgers. Having just collected the huge sum of £3bn, HMRC is working on tough new penalties for accountants and consultants who provide suspect tax avoidance advice.