There are less than 3 months before the VAT rate changes to 20% so businesses should have their plan of action in place to deal with the administrative changes. Some thought should also be given to any beneficial steps that can be taken in the lead up to the VAT change, for example a simple way to plan in advance of this is to pay prior to the rate change. So you could pre-purchase specific goods and services at the old rate, as long as you pay for them and therefore set a tax point. This can only be done for specific goods or services but not for a general class of supply. There are anti-forestalling rules which limit the amount from any one supplier to £100K.
There has been much press coverage of Dolce & Gabbana reportedly being under investigation for evading tax in Italy. This is a sure sign of the times and a topic that has also been receiving huge media attention in the UK as a result of the Government recently voicing its opinion. The Chief Secretary to the Treasury, Danny Alexander, reported that he and the Chancellor had agreed a package of new measures to crack down on tax avoidance and evasion and that they would be “ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra". Apparently some £900million is going to be spent, with an expected raising of £7billion each year by 2014/15.
The opinion of our Head of Tax, Andrew Jupp, is one which is likely to be shared by many. Whilst having no problem with tackling tax avoidance, with properly targetted legislation aimed at blocking so-called loopholes, or deficiencies in the drafting of legislation, issues do arise with the blurring of the distinction between tax avoidance - which is perfectly legal if it is within the letter of the law - and tax evasion which is completely illegal and a serious offence. It has long been understood - and there have been many Court rulings which have supported this - that whilst not everyone might find tax avoidance morally acceptable, it is in no way illegal.
Whilst welcoming more clarity in the tax legislation, particularly if it makes it easier for taxpayers to be fully compliant and not make mistakes. But we believe it is fundamentally wrong and unfair to suggest that tax avoiders and tax evaders are one and the same thing.
At least there was clarity in HMRC's later announcement that it is launching a tax evasion probe into a number of UK tax residents who have money in Swiss bank accounts. It is understood that HMRC has sent Code of Practice 9 (COP 9) letters to more than 200 individuals who it is believed have failed to declare interest from private deposit accounts with HSBC's bank in Switzerland. Although it is difficult to make further comment it is good to see that HMRC has made it clear that it views this as tax evasion, and not tax avoidance.
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