CIOT logo

CIOT: Government compliance target ‘ambitious and optimistic’

CIOT: Government compliance target ‘ambitious and optimistic’

Commenting on the tax compliance measures in today’s Autumn Statement, Chartered Institute of Taxation Tax Policy Director Patrick Stevens said:

“Today the Chancellor announced a package of measures to combat avoidance, evasion and fraud, which are claimed to raise a total of £9bn over the next 5 years. This is a large number even in the context of what is often claimed for rule changes of this sort. It is very seldom that numbers are ever published after the event showing estimates of how much tax is actually raised as a result of such measures. This is an ambitious and optimistic target.

“By far the biggest contributions are expected to come from two measures.

“The first relates to a general crackdown on the use of partnerships that have allocated profits and losses between individual and corporate partners to get the best overall results. The first effect of this was announced in the Budget last March but there has now been a recognition that there will be a much greater impact on the managers of Alternative Investment funds (such as hedge funds) than had been recognised. These increased taxes seem to assume that the hedge fund managers will not be able to come up with other ways of reducing their UK taxes, such as moving overseas.

“Partnerships who use service companies have also been targeted to remove advantages that can arise in this situation. This change was first announced in September.

“The second big change relates to onshore employment intermediaries. We sympathise with the Government’s problem in this area, where, as a means of not paying National Insurance and reducing income tax liabilities through claiming expenses, a number of intermediaries, particularly in the construction and agriculture sectors, treat their workers as if they are self-employed rather than employees. A solution was proposed in 2009 which was however inadequate. It proposed some broad brush tests which could have caught some genuinely self-employed individuals and failed to address the worker’s loss of employment rights. We would be very keen to work with Government to ensure that a more appropriate set of proposals are developed.

“A further amount is raised from a package of measures aimed at "high risk providers" of tax avoidance schemes, mainly aimed at individuals and private companies. This will involve designating some people and firms as "high risk" to the tax authority. There will be much debate over who should be designated in this way. The money will be raised by forcing the users of such schemes to make payments of their taxes when another similar scheme has been beaten in the courts.

“In addition a number of smaller loopholes have been closed to ensure that the tax system operates as it was intended.”


Notes for editors

1.       The Chartered Institute of Taxation

The Chartered Institute of Taxation (CIOT) is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries.  The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

 

The CIOT’s 17,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

George Crozier
External Relations Manager

D: +44 (0)20 7340 0569
M: +44 (0)7740 477374