Question to the HM Treasury:

To ask Her Majesty’s Government what action they have taken to prevent the use of aggressive tax avoidance schemes under which employers reduce their national insurance payments and exploit VAT rules designed to benefit very small businesses; and with what results.

These schemes are under investigation by HM Revenue and Customs (HMRC). Penalties are in place for those caught attempting to avoid tax by using an avoidance scheme. This includes promoters of such schemes who can face fines of up to £1 million for failing to notify an avoidance scheme under the Disclosure of Tax Avoidance Schemes regime.

In the last two years, HMRC has secured an additional £5.5 billion through targeting tax avoidance schemes. The Chancellor of the Exchequer announced in the Autumn Statement 2016 that the Government will counter abuse of the VAT Flat Rate Scheme while keeping VAT accounting simple for the small businesses that use the scheme as intended.