HMRC is consulting until 20 June 2018 on proposals for tackling avoidance and evasion through abuse of the insolvency regime, including phoenixism. Measures under consideration include extending HMRC’s powers to transfer liability for tax debts to cover all taxes and making a wider range of persons responsible for the avoidance, in addition to introducing joint and several liability.
The discussion paper considers three main areas of concern:
those who exploit insolvency procedures to avoid or evade taxes;
attempts to protect or hide the gains of tax avoidance or evasion; and
those who repeatedly accumulate tax debts without paying them, by means of setting up a series of corporate entities.
After providing examples of each of these in chapter 2, it asks whether respondents believe they are the right targets and/or whether there are further examples of problem behaviour in this area.
HMRC is considering a number of potential solutions, including legislation and operational measures. Two possible approaches outlined in the consultation document are:
extending the power to transfer liability to tax debts to the persons responsible for the avoidance (i.e. further than current powers to transfer to directors and officers in particular circumstances), evasion or repeated non-payment of taxes when there is a risk the funds will be lost in insolvency; and
holding the persons responsible for the avoidance, evasion or repeated non-payment of taxes jointly and severally liable for tax debts in the event that the company could not meet the tax debts.
HMRC also welcomes any alternative suggestions for ways to tackle the issue, whether legislative or non-legislative, including safeguards that should be put in place to protect taxpayers.
HMRC intends to publish a response document later this year, with any legislative changes being taken forward as part of a future finance bill.
HMRC is consulting until 20 June 2018 on proposals for tackling avoidance and evasion through abuse of the insolvency regime, including phoenixism. Measures under consideration include extending HMRC’s powers to transfer liability for tax debts to cover all taxes and making a wider range of persons responsible for the avoidance, in addition to introducing joint and several liability.
The discussion paper considers three main areas of concern:
those who exploit insolvency procedures to avoid or evade taxes;
attempts to protect or hide the gains of tax avoidance or evasion; and
those who repeatedly accumulate tax debts without paying them, by means of setting up a series of corporate entities.
After providing examples of each of these in chapter 2, it asks whether respondents believe they are the right targets and/or whether there are further examples of problem behaviour in this area.
HMRC is considering a number of potential solutions, including legislation and operational measures. Two possible approaches outlined in the consultation document are:
extending the power to transfer liability to tax debts to the persons responsible for the avoidance (i.e. further than current powers to transfer to directors and officers in particular circumstances), evasion or repeated non-payment of taxes when there is a risk the funds will be lost in insolvency; and
holding the persons responsible for the avoidance, evasion or repeated non-payment of taxes jointly and severally liable for tax debts in the event that the company could not meet the tax debts.
HMRC also welcomes any alternative suggestions for ways to tackle the issue, whether legislative or non-legislative, including safeguards that should be put in place to protect taxpayers.
HMRC intends to publish a response document later this year, with any legislative changes being taken forward as part of a future finance bill.
