HMRC estimates that approximately £0.4bn of tax was lost to marketed tax avoidance in 2020/21. It notes that the market continues to be dominated by disguised remuneration schemes facilitated by non-compliant umbrella companies. A further £0.8bn was estimated to be lost in other forms of avoidance behaviour (£0.6bn in corporation tax and £0.2bn in VAT and other taxes).
HMRC’s summary notes that the number of taxpayers using tax avoidance schemes has declined steadily from the record high in 2017/18. In 2020/21, it stood at an estimated 31,000 individuals and 1,000 employers.
HMRC believes that around 20 – 30 promoters are behind most of the tax avoidance schemes currently being marketed to the UK public. It also estimates that there are around 70 – 80 non-compliant umbrella companies involved in the operation of disguised remuneration schemes.
HMRC also sets out the activities being carried out to combat this avoidance activity and has already been making use of the additional powers granted under Finance Act 2021. It has issued 26 disclosure of tax avoidance scheme (DOTAS) warning notices to promoters where it reasonably suspects that particular arrangements have failed to be notified under DOTAS. Scheme reference numbers have been issued in respect of 19 of these notices.
In addition, HMRC has been making use of the powers granted under Finance Act 2022 to publish information about tax avoidance schemes and their promoters. It has also issued over 230 information notices to promoters and other parties it believes are enabling tax avoidance. These notices require promoters to provide information about their activities.
HMRC also uses the summary to remind taxpayers of the facilities and settlement terms available to help them settle their outstanding avoidance use and pay any tax due. These include the 2020 disguised remuneration settlement terms and the more general settlement arrangement. It also contains a reminder of the time to pay facility. The summary discloses that there are typically more than half a million people using time to pay at any one time (with nine out of ten completing it successfully).
HMRC has taken action to stop or prevent taxpayers using tax avoidance schemes, including:
- The ‘tax avoidance – don’t get caught out’ campaign, accompanied by an interactive risk checker.
- One-to-many compliance campaigns that involve HMRC writing to taxpayers and agents when HMRC’s systems show that taxpayers might have joined an avoidance scheme. The letters help taxpayers to understand what they need to do to pay the right amount of tax.
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