HMRC proposes daily checks on tax avoidance firms

The taxman plans to clamp down on accountants who set up aggressive tax dodging schemes by checking rogue firms on a daily basis.

In plans launched this week by HM Revenue & Customs will propose regular checks on troublesome firms to kill tax dodging schemes before they can be implemented.

Current tax rules mean that anyone who sets up an avoidance scheme must tell Revenue & Customs within five days of starting to market the plan to clients.

HMRC can block schemes by changing the tax laws to close a loophole, but until then scheme organisers and tax dodgers have a short window before being closed down. Usually they try to target clients within a 48-hour window.

The Revenue can claim back tax from a scheme retrospectively but only in cases where rules have been unequivocally broken.

Under the new proposals outlined in the Disclosure of Tax Avoidance Schemes (DOTAS) consultation, officials will be empowered to monitor some accountants ‘in real time’, meaning they will see schemes as they are drawn up and can block them before anyone is signed up.

Officials are keen to target a small number ‘tax boutique firms’ who specialise in marketing personal tax avoidance schemes to wealthy individuals.

Under the new plans, HMRC are also hoping to introduce penalties for the users of such schemes which would come into effect if they do not pay up once the scheme has been defeated in the courts.

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