Inland Revenue Cracking Down On 'Aggressive' Tax Planning, Warns ACCA

by Robin Pilgrim, LawAndTax-News.com, London

11 November 2003

The UK's Association of Chartered Certified Accountants (ACCA) has accused the Inland Revenue of being over-zealous in its campaign to clamp down on tax evasion.

Responding to the revelation that in the last budget, the government made some £66 million available over three years to fight tax evasion and "aggressive" tax planning, Chas Roy-Chowdhury suggested that the tax authority has been going after those who are lawfully minimising their tax liabilities.

"The Inland Revenue has been blurring the boundaries," he observed.

However, speaking to the Financial Times last week, deputy chairman of the Inland Revenue, Dave Hartnett dismissed this claim, arguing that:

"We don't muddle up avoidance and evasion and we don't browbeat people."

However, he criticised those who employ "aggressive" tax planning measures, such as the creation of offshore trusts to receive income, the purchase and resale of shares at artificially different prices for tax purposes, and the exploitation of inappropriate tax breaks, arguing that individuals and firms which employ those measures increase the tax burden on others, and divert resources away from development.

"There are very clever people out there making up this tax avoidance industry and very clever people here countering it," he explained, musing: "Is that the best use in the 21st century of a load of clever people?"

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