The Chancellor George Osborne has stated that the Government will raise more than £5 billion by tackling those who evade tax and those who take part in “aggressive” tax avoidance.
The Chancellor swore that the Government would increase Her Majesties Revenue and Customs capacity and resources by investing £0.75 billion to raise £7.2 billion in extra tax revenue.
He stated: “We’re boosting HMRC’s capacity with three quarters of a billion pounds of investment to go after tac fraud, offshore trusts and the businesses of the hidden economy, tripling the number of wealthy evaders they pursue for prosecution – raising £7.2 billion in extra tax.”
Tax avoidance and evasion is also no longer the sole areas under scrutiny, as the Chancellor designated that tax “planning” would also be targeted in order to generate savings.
The Chancellors budget document reveals that the Government plans to raise “£5 Billion by 2019-2020.” This will come from undertaking tasks targeting tax avoidance, tax planning, evasion and compliance and, ultimately, imbalances in the tax system.
The Government will also strengthen the GAAR – General Anti-Abuse Rule. This will feature tougher tax geared penalties, alongside the naming and shaming of ‘serial avoiders’ using failed tax avoidance schemes.
The Government document states: “The Government will consult on the technical details of introducing tougher measures for those who persistently enter into tax avoidance schemes that fail, including a surcharge on those whose latest tax return is inaccurate due to the use of a failed scheme and publishing the names of such avoiders.
The document also states that the penalty for not following GAAR will be proportional to the amount of tax recovered by the General Anti-Abuse Rule.
Alongside closing the Liechtenstein Disclosure Facility among others, the introduction of automatic exchange of information is expected to lead to a significant increase in HMRC compliance activities and enquiries.
Budget 2015 Tax Avoidance: Abolishment of Permanent Nom Dom Status
In addition to increasing HMRC’s anti-avoidance resources, the Chancellor devoted time and resources into ending permanent non-domicile status.
Osborne noted the “fundamental unfairness” in the nom-dom regime and has abolished permanent non-dom tax status.
“Anyone resident in the UK for more than 15 of the past 20 years will now pay full British taxes on all worldwide income and gains.”
The Government is now going to consult so they “get the detail right”.
The fresh measures will start to effect processes in April 2017 – forecast to being in a further £1.5 billion in extra taxation for this parliament.
As of April 2017, the Conservative Government will also introduce new rules so that everyone owning a residential property within the United Kingdom and would otherwise pay inheritance tax on the property itself can no longer avoid paying by holding it in an offshore structure.