A list of over 800 schemes that HM Customs and Revenue (HMRC) believes have been created with the sole intention of avoiding paying tax has been published.
Comprising a list of numbers that will be recognisable to members of the schemes, the list is an advance move in time for new powers being introduced next month.
Accelerated payments
The publication of the list comes as the Liberty scheme has been getting great exposure in the national press. That scheme, and similar ones, have seen the likes of David Beckham, Michael Caine, Anne Robinson, Gary Barlow, and Jimmy Carr all caught up in tax avoidance stories.
Overall, HMRC estimates that there are about 33,000 people signed up to such schemes, amounting to billions of pounds in ‘unpaid’ tax. HMRC will start taking action to recover the disputed cash over the next two years.
Its efforts will be largely helped by new powers being introduced in August, which will see accelerated payments able to be demanded. This will see anyone in the schemes given just 90 days to pay their tax bill. The bill can be contested, but the cash will have to be paid in advance and only be returned should the court rule so.
Using the clues
Despite admitting that she was “clueless about tax”, celebrities like Katie Melua, who is caught up in the Liberty fiasco, will be able to manage getting the cash together more readily than others. As a result, accountants are warning that the number of personal bankruptcy in the UK could go up.
The rate of businesses facing major cashflow issues is also likely to increase, according to experts in the accounting industry. Many firms have made investments into such schemes over the years and could face unexpected tax bills of thousands.
Working by investing in industries such as film and music, schemes like Liberty work by offsetting any losses against income and profits. They are not illegal, but the fact that they are set up solely with the intention of reducing the tax bill is being contested by HMRC in its action.
Help should be sought
Anyone facing problems meeting their tax bill is advised to seek help as soon as possible, with HMRC likely to be in no mood to go softly on people, whatever the reasons or mitigations.
For any firms that could be facing issues, engaging with a firm of outsourced accountants now could help minimise the fall out. Moving forward too, seeking reputable advice with the assurance of HMRC could be a sensible strategy to implement.