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David Beckham among 33,000 to receive new tax demand | David Beckham among 33,000 to receive new tax demand |
(2 days later) | |
Some of the biggest names in business, entertainment and sport will soon be receiving letters demanding payment of disputed tax bills. | Some of the biggest names in business, entertainment and sport will soon be receiving letters demanding payment of disputed tax bills. |
Under the new finance bill, which will become law in the next few weeks, HM Revenue and Customs (HMRC) will gain new powers to make them pay upfront. | Under the new finance bill, which will become law in the next few weeks, HM Revenue and Customs (HMRC) will gain new powers to make them pay upfront. |
About 33,000 people who invested in tax avoidance schemes will be affected. | About 33,000 people who invested in tax avoidance schemes will be affected. |
Among them are footballer David Beckham and business leaders such as Centrica chief Sam Laidlaw. | Among them are footballer David Beckham and business leaders such as Centrica chief Sam Laidlaw. |
The list also features current regulators including former London Stock Exchange boss Clara Furse. | The list also features current regulators including former London Stock Exchange boss Clara Furse. |
They will be asked to pay the disputed tax within 90 days of receiving the letter. | They will be asked to pay the disputed tax within 90 days of receiving the letter. |
They will only get the money back if the dispute is eventually settled in their favour. | They will only get the money back if the dispute is eventually settled in their favour. |
They may get the money back if HMRC ultimately loses legal arguments, but in the meantime, the money will be in the Exchequer rather than in their pockets. | They may get the money back if HMRC ultimately loses legal arguments, but in the meantime, the money will be in the Exchequer rather than in their pockets. |
The government hopes the new rules and the inability to defer tax payment for years will make these schemes less attractive. | The government hopes the new rules and the inability to defer tax payment for years will make these schemes less attractive. |
A spokesman for HMRC described the new powers as a "game-changer" in the battle against tax avoidance. | A spokesman for HMRC described the new powers as a "game-changer" in the battle against tax avoidance. |
Avatar | Avatar |
There are many different types of scheme, but most involve the investor putting money into a venture that, on paper at least, makes losses. | There are many different types of scheme, but most involve the investor putting money into a venture that, on paper at least, makes losses. |
Those losses can be set against other earnings, bringing the individual's total income down, resulting in a lower tax bill. | Those losses can be set against other earnings, bringing the individual's total income down, resulting in a lower tax bill. |
The tax authorities consider this to be deliberate avoidance of tax and are challenging the legality of many of these structures. | The tax authorities consider this to be deliberate avoidance of tax and are challenging the legality of many of these structures. |
Investment schemes to finance films share some of these characteristics. | Investment schemes to finance films share some of these characteristics. |
A spokesman for one company that arranged film-financing schemes said they helped fund investment in films including Avatar and The Life of Pi. | A spokesman for one company that arranged film-financing schemes said they helped fund investment in films including Avatar and The Life of Pi. |
He pointed to successive governments' policy of encouraging investment in UK films by offering favourable tax treatment. | He pointed to successive governments' policy of encouraging investment in UK films by offering favourable tax treatment. |
Speaking to the Treasury Select Committee, HMRC's chief executive, Lin Homer, said that some of these schemes required investors to pay into a potential litigation fighting fund and to promise not to come to any personal agreement or settlement with HMRC. | Speaking to the Treasury Select Committee, HMRC's chief executive, Lin Homer, said that some of these schemes required investors to pay into a potential litigation fighting fund and to promise not to come to any personal agreement or settlement with HMRC. |
That, she said, should have set alarm bells ringing and was evidence of the true nature of these arrangements. | That, she said, should have set alarm bells ringing and was evidence of the true nature of these arrangements. |
Debtors | Debtors |
In addition to being granted the powers to demand payment now for tax bills still in dispute, HMRC is also seeking additional powers to take money directly from individuals' bank accounts. | In addition to being granted the powers to demand payment now for tax bills still in dispute, HMRC is also seeking additional powers to take money directly from individuals' bank accounts. |
It says it needs this power in exceptional circumstances when tax bills that are not in dispute are still not paid. | It says it needs this power in exceptional circumstances when tax bills that are not in dispute are still not paid. |
It says there are some 17,000 of what Lin Homer called "recalcitrant debtors". | It says there are some 17,000 of what Lin Homer called "recalcitrant debtors". |
That proposal is currently undergoing a consultation process that ends in three weeks. | That proposal is currently undergoing a consultation process that ends in three weeks. |
If approved by parliament, which is by no means certain, it will be in force in a year's time. | If approved by parliament, which is by no means certain, it will be in force in a year's time. |