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Sharp decline in declared tax avoidance schemes

Figures show 'important trend' in HMRC's fight against abuse

14 November 2013

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Figures show 'important trend' in HMRC's fight against abuse

The number of declared tax avoidance schemes in the UK has continued to fall in the six months to September 2013, according to figures from HMRC.

For that period, only 30 schemes were registered, compared with 89 in the 2012-13 tax year, 151 in 2011-12, and 607 in 2005-6.

Ronnie Ludwig, partner in the private wealth group at accountants Saffery Champness, suggests that the long-term decline in these types of schemes is a significant trend in HMRC's battle against tax avoidance, and indicates some measure of success.

However, he said, it may also show a growing turn towards bespoke tax planning measures.

"This indicates to me that the campaign against so-called off the shelf schemes is apparently working, and that those who have engaged in taking up

the schemes, as well as those promoting them, are now backing off from new schemes as the previous ones are being successfully challenged by HMRC.

"Expensive litigation costs associated with trying to defend schemes will also be a major factor."

Ludwig said the success of the disclosure of tax avoidance schemes rules, which compel those responsible for tax avoidance schemes to declare them to HMRC so the government can close loopholes, "is likely to provoke a return to more bespoke tax mitigation planning".

"Although advisers will be very aware of the general anti-abuse rule, which HMRC now has in its arsenal if mitigation planning is deemed to be abusive."

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Tax & Wealth structuring