Market leading insight for tax experts
View online issue

Corporation tax planning schemes ‘virtually dead’

printer Mail

The number of businesses using corporation tax planning schemes fell by 42% between 2015/16 and 2016/17 and has tumbled 88% since 2012/13, according to figures obtained in a freedom of information request by accountancy group UHY Hacker Young.

The figures reveal that just 330 businesses informed HMRC they were using corporation tax planning schemes in 2016/17, as compared with 2,860 in 2012/13.

The general anti-abuse rule (GAAR), accelerated payment notices, penalties for enablers of tax avoidance, and the new corporate criminal offence of failure to prevent facilitation of tax evasion are among the powers HMRC now has at its disposal to tackle tax avoidance.

‘The corporation tax planning scheme is now virtually dead’, commented Clive Gawthorpe, partner at UHY Hacker Young.

Schemes like employee benefit trusts, once commonplace, have now almost completely died out, Gawthorpe said. Tax schemes used more recently include:

  • business owners using assets of the business to make a spread bet on the movements of the stock market, later taking the winnings tax-free (defeated at the FTT in Root2tax Ltd and Another [2017] UKFTT 696 (TC)); and
  • employer-funded retirement benefit schemes, in which an employer pays into a discretionary trust for an employee’s retirement at much lower tax rates (declared not reasonable by the GAAR advisory panel).
Categories: News , Corporation tax