Individuals, companies and partnerships that have used tax avoidance schemes will this month receive letters from HM Revenue & Customs inviting them to settle up without having to face a tribunal or the courts.
Unveiling the amnesty, HMRC said all eligible participants – those in specific partnerships, companies and sole trader arrangements suspected of avoiding tax – will be written to no later than January 31st 2013.
Under its terms, participants should be able to settle with the taxman without recourse to litigation, although HMRC ‘reserves the right to rely on all arguments including those that may deny any relief completely in litigation.’
Following scrutiny of travel and subsistence schemes for temporary workers, there is some concern that the settlement opportunity could be used to ensnare providers suspected of not complying with the tax rules around expenses.
Such concern appears to have stemmed from HMRC’s wording in an overview to the amnesty, which states it applies to those who “seek to create tax relief much greater than the real economic cost borne by the participants.”
For now, however, only three types of scheme have been identified by HMRC: those which use Generally Accepting Accounting Practice to write off expenditure or the value of assets to create losses; those which seek to access the film relief rules and those which seek to create losses in partnerships.
The amnesty follows George Osborne’s announcement before his Autumn Statement that new funding of £77m to tackle tax avoidance and evasion should be poured into HMRC, including £30m to improve its Connect computer system.