UK Budget 2021 - administration, avoidance and evasion

Mar 08, 2021

The Budget documents confirm additional investment in HMRC and several avoidance and evasion measures which have now become traditional on Budget Day.

Key areas are as follows:-

  • A review will be conducted of large businesses’ experiences of UK tax administration, including the degree to which it provides businesses with early certainty where appropriate, ensures the efficient resolution of disputes in accordance with the law, and promotes a collaborative and constructive approach to compliance with the law.
  • New powers will be introduced to make the possession, manufacture, distribution and promotion of electronic sales suppression (“ESS”) software and hardware an offence and new ESS-specific information powers will allow HMRC to identify developers and suppliers in the ESS supply chain and access software developers’ source code;
  • The government will consult on the implementation of OECD rules that will require digital platforms to send information about the income of their sellers to both HMRC and the seller themselves;
  • A consultation will be launched on the implementation of OECD rules to combat offshore tax evasion by facilitating global exchange of information on certain cross-border tax arrangements;
  • A summary of responses to the consultation ‘Tackling Promoters of Tax Avoidance’ is now published which sets out a package of measures to strengthen existing anti-avoidance regimes and tighten the rules designed to tackle promoters and enablers of tax avoidance schemes;
  • The penalties that may be charged to anyone receiving a Follower Notice as a result of using tax avoidance schemes are being reduced from 50% to 30% of the tax under dispute. A further penalty of 20% will be charged if the Tax Tribunal decides that the recipient’s continued litigation against HMRC is unreasonable;
  • From April 2023, the government will make the renewal of certain licences in Scotland and Northern Ireland conditional on applicants completing checks that confirm they are appropriately registered for tax. In Northern Ireland, this will apply to licences to drive taxis;
  • A civil penalty for the unauthorised removal of goods that have been seized from the trader’s premises will apply to traders removing seized goods without prior authorisation from HMRC; and
  • The government will invest a further £180 million in 2021/22 in additional resources and new technology for HMRC.