Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent steps he has taken to tackle providers of loan scheme arrangements which have (a) promoted and (b) enabled tax avoidance schemes.

This Government is committed to tackling avoidance in all its guises. HMRC has a suite of powers to tackle and challenge those who promote or otherwise enable tax avoidance and HMRC is using its powers to challenge all major promoters of avoidance schemes, including disguised remuneration (DR) avoidance schemes. In recent years, HMRC has been investigating over 100 promoters and others involved in avoidance, including disguised remuneration arrangements. In the last year, HMRC has taken litigation action against 5 scheme promoters for failure to disclose under Disclosure of Tax Avoidance Schemes (DOTAS) with others deciding to disclose to avoid litigation. Further cases will be litigated in the year ahead.

HMRC has used its powers under the Promoters of Tax Avoidance Schemes (POTAS) legislation to challenge promoters and made three successful complaints to the Advertising Standards Authority about misleading advertising; two of which relate to disguised remuneration schemes. In addition, the ‘Enablers’ penalty regime, introduced in Finance (No. 2) Act 2017, means anyone who knowingly enables another person to use an abusive tax arrangement that is later defeated by HMRC will face a penalty of 100% of the fees they have earned from that activity. HMRC consider criminal investigation and referrals to prosecuting authorities where appropriate.

Since the announcement of the 2019 loan charge at Budget 2016, HMRC has agreed settlements on disguised remuneration schemes with employers and individuals of over 650 million pounds. Overall, 75% of this amount is expected to come from employers, and only 25% from individuals. If scheme users repay the loan or agree a settlement for the tax that they owe with HMRC, they will not face the charge.

HMRC has also introduced a simplified process for those who choose to settle their use of DR avoidance schemes before the loan charge arises. DR scheme users who currently have an income of less than £50,000 and are no longer engaging in tax avoidance can automatically agree a payment plan of up to five years without the need to give HMRC any information about their income and assets. This arrangement has been extended to 7 years for scheme users who have an income of less than £30,000.