11/04/24

The Finance Act 2024 | Promotors of Tax Avoidance Schemes

The Finance Act 2024 | Promotors of Tax Avoidance Schemes
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The Finance Act 2024 (‘The Act’), received Royal Assent on the 22 February 2024. Among its provisions is the implementation of several tax reliefs and exemptions, new criminal offences related to Tax Avoidance Schemes, and an increase in maximum terms of imprisonment for individuals convicted of tax offences.

Hamraj Kang highlights the Act to the extent that it provides for these changes.

Tax Reliefs and Exemptions

These include:

  • A merged Research and Development Scheme replacing the former R&D tax relief, for small and medium sized companies (SMES), and R&D expenditure credit (RDEC), claimed by large companies.
  • Tax relief schemes for films, television programmes, video games, theatres, museums, and gallery exhibitions. The focus is on clarification, providing greater certainty and streamlining the administrative process of the available reliefs.
  • Schedule 15 of Finance Act 2020 is amended to introduce a corporation tax exemption for specified compensation payments and an income tax and capital gains tax exemption for specific relevant onward payments of compensation.
  • Section 42(1)(a) of the Finance Act 1996 is amended to increase both rates of Landfill Tax in line with inflation. The increased rates apply to any disposal of relevant materials made (or treated as made) at a landfill site in England and Northern Ireland on or after 1 April 2024.
  • Changes to the Construction Industry Scheme (CIS) rules which expand the grounds for immediate removal of Gross Payment Status (GPS) for cases of fraud involving Value Added Tax (VAT), Corporation Tax Self-Assessment (CTSA), Income Tax Self-Assessment (ITSA) and Pay as You Earn (PAYE). It also adds compliance with VAT obligations to the GPS compliance test, which must be passed by subcontractors to obtain and keep GPS after 6 April 2024.
  • Amendments are to be made to the types of Tax Returns through which HMRC collects data designed to improve and enhance the quality of information collected.

Tax Avoidance Schemes

The Act contains several sections tackling Tax Avoidance Schemes.

Director Disqualification

Section 33 of the Act makes provision for HMRC to apply for director disqualification proceedings under The Company Directors Disqualification Act 1986 against directors, company officers and others engaged in the promotion of Tax Avoidance Schemes.

Stop Notices

Section 34 of the Act introduces criminal offences affecting Promoters of Tax Avoidance Schemes who fail to comply with Stop Notices.

A Stop Notice requires all persons subject to the Notice to stop promoting the Scheme specified in the Notice and to comply with such other requirements as specified.

Section 34 states:

‘a person who, without reasonable excuse, fails to comply with a duty imposed [for dealing with such a notice] is guilty of an offence.’

Section 34 also extends the offence to cover liabilities of a corporate or partnership body which fails to comply with Stop Notices.

Sentencing Upon Conviction

Section 32 of the Act increases the maximum prison sentence available from seven years to fourteen years for a number of offences including:

  • Customs and Excise Management Act 1979: Improper importation of goods
  • Finance Act 1994: Fraudulent evasion of duty
  • Vat Act 1994: Fraudulent evasion of VAT
  • Finance Act 2003: Fraudulent evasion of stamp duty land tax
  • Finance Act 2021: Plastic packaging tax: conduct involving evasions and false statements.

How Can We Assist?

The necessity for company directors and other officers to remain alert to the constantly changing tax reliefs, regulations, and penalties for breach of legal obligations becomes increasingly demanding.

The Team at KANGS, as a matter of course, observes the constant changes in tax legislation and offers its clients enormous experience when dealing with HMRC issue at every level, including defending those charged with tax related offences. Such proceedings are, inevitably, complex, and lengthy requiring in-depth knowledge and expertise handling.

If you need any form of assistance, it is crucial to immediately seek professional advice and guidance. The accomplished and award-winning team at KANGS would be thrilled to assist you. Please do not hesitate to reach out to us using the contact details provided below:

Tel:       0333 370 4333

Email: info@kangssolicitors.co.uk

We provide an initial no obligation consultation from our offices in London, Birmingham, and Manchester. Alternatively, we provide initial consultations by telephone or video.

Hamraj Kang

Hamraj Kang
Senior Partner

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Tim Thompson

Tim Thompson
Partner

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John Veale

John Veale
Partner

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