A fivefold increase in prosecutions against tax evaders could see HMRC bringing 800 people a year to court. In the year to September 30 2009, the Revenue brought 157 prosecutions against individuals.
The proposal to dramatically increase the number of cases it takes to court is a complete u-turn on recent years when HMRC has been reducing the number of prosecutions. In fact the Revenue recently reiterated that fewer tax evasion cases would be contested in the courts.
Jason Collins, a partner at McGrigors, points out that HMRC has a lamentable record when it comes to successfully prosecuting tax cases and it is highly unlikely that it will be able to improve its success rate fivefold without it also making many more errors.
Meanwhile, Rob Crossland, the chief executive of umbrella company Parasol, has warned contractors about the dangers of using Employee Benefit Trusts in an effort to maximise their net pay.
An EBT is a legal agreement whereby somebody owns assets on behalf of another person. Most commonly, these assets are pension funds or family trusts. The problem occurs when the assets are held in offshore schemes and indications suggest that the Revenue wants to prevent contractors from capitalising on Double Taxation Treaties and Offshore Trusts.
Now that the Treasury has announced plans to give HMRC a further £900m to tackle tax evasion, anyone who is non compliant will have cause to worry. Among the proposed measures designed to catch offshore tax evaders, the Revenue will create a new team of investigators dedicated solely to catching anyone hiding money offshore.
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