The government has today published details of a host of consultations it is holding on the UK tax system, including its approach to non-compliance with tax rules.

Its action on tax avoidance falls into four main categories.

Promoters of tax avoidance

The first area in which the government is pledging a renewed focus is on how promoters of tax avoidance schemes are handled. The authorities have put together a package of measures which it believes will make life harder for businesses that promote these schemes, which include allowing HM Revenue & Customs to secure or freeze a promoter’s assets to ensure that they pay any penalties levied against them, as well as cutting out offshore promoters of avoidance schemes.

Other measures include closing down companies that promote avoidance schemes and disqualifying their directors, as well as introducing greater support for individual taxpayers so that they can identify and avoid using such schemes.

Disguised remuneration tax avoidance

These are schemes where people can avoid paying tax on their income, as the money is paid in ways that should be non-taxable, such as through apparent ‘loans’.

The Treasury called for evidence from businesses and the public about these schemes, and published a summary of their responses last year. It has pledged to do more not only to tackle the promoters of these schemes, but also to educate taxpayers about the risks of becoming involved with such a scheme. An awareness campaign was launched at the tail-end of last year, focusing on individual sectors which were viewed as being most at risk from such schemes.

Off-payroll working rules

These rules are more commonly known as IR35, and designed to ensure that people working like employees but through their own limited company or other intermediary pay essentially the same income tax and national insurance as those who are directly employed.

The IR35 reforms have been controversial, with some formerly self-employed workers switching to employed status as a result. While they were due to be properly introduced to the private and voluntary sectors in April 2020, this was put back a year due to the pandemic.

However, they were introduced to public sector roles back in 2017, with the government promising to publish external research into the impact of those reforms on the education sector and employment agencies.

Safe havens

Finally, there is the taxman’s ‘no safe havens’ strategy. The idea is to ensure that taxpayers comply with their tax obligations, no matter where their income or gains were made ‒ in effect that there is no safe haven that allows them to avoid paying what they owe.

In order to do this, the government is now publishing two discussion documents which it hopes will help inform what policies it introduces down the line to support this strategy, looking at both how to help taxpayers get offshore tax right first time and better ways to prevent and collect international tax debt.