22 Jul HMRC to crack down on corporate tax avoidance
Large businesses who engage in aggressive tax avoidance practices could soon find themselves put into “special measures” according to The Telegraph. Once they have attracted the interest of HMRC their future activity will be put under much greater scrutiny under proposals expected to be announced soon.
The government will soon be consulting on a raft of measures aimed at cracking down on corporate tax avoidance including a voluntary code of practice which will set out the standards of behaviour expected of big businesses with respect to their tax affairs.
It is suggested that one of the requirements would be for businesses to behave according to the “spirit” of the law not merely the letter of the law. This could have significant implications for business:
- where there are grey areas or doubt about the intention of a rule companies may be required to seek advice before they act and be bound by the outcome of these discussions
- the time taken for discussions to occur could slow down decision making in UK corporates resulting in worse outcomes
- considering the UKs hugely complex tax regime it may be impossible to know what parliaments’ intention was with much tax law leaving HMRC to make the decision. Critics suggest this will come to mean the decision which allows HMRC to best meet it’s internal targets!
Although the code of practice is expected to be voluntary there is suspicion that it will become semi statutory as firms come under pressure to sign up for fear of being considered supporters of tax avoidance.
While there is no suggestion at present that the code of practice would in future be applied to smaller businesses it is clear that HMRC are focussing much more on suspected tax avoidance and businesses large and small are coming under greater scrutiny.
It has never been so important that your tax affairs are in order.