Owner-managed businesses to face scrutiny
THE Chancellor has maintained his commitment to clamp down on individuals who seek to evade tax with a new penalty regime for those caught.
Owner-managers of businesses who extricate money from their firms in ways other than salary or dividends will come under greater focus as HM Treasury aims to close the tax gap.
HM Treasury has also launched a consultation – cash, tax evasion and the hidden economy – as it seeks views on what changes in the use of cash mean for tax compliance.
Nick Scull, tax partner said: “The Chancellor announced further anti-avoidance measures to go alongside several already in the pipeline. This time there was the promise of a new penalty regime for those caught by the General Anti-Abuse Rule, and action on “disguised remuneration” – where owner-managers take money out of their companies other than as salary or dividends.
“The increasing complexity of the tax system combined with ever greater powers for HMRC would be expected to make the more ‘adventurous’ taxpayer think twice, but it could also unintentionally increase the anxiety levels for innocent taxpayers with more complex affairs.
“There was also an call for evidence of the extent of tax evasion by cash businesses presumably with a view to bringing in better tools to catch those who deliberately fail to declare their income. The call for evidence is also about getting a picture of the use of other payment methods that don’t leave an audit trail.
“The hidden economy has a serious impact on businesses who prefer to meet their tax compliance obligations, and so any initiative by HMRC to look into this area is to be welcomed.”
For further information on this subject, please contact Nick Scull or enquiry@garbutt-Elliott.co.uk – 01904 464 100