HMRC bungle lets tax avoiders off the hook

Jul 10, 2014

Some celebs will be let off, but law change leaves David Beckham braced for HMRC demand

Some investors in the aggressive tax avoidance scheme Liberty will be let off paying millions of pounds because of a paperwork error by HMRC officials, reports The Times this morning.

Inspectors failed to challenge the tax returns of at least 26 Liberty investors within the timeframe allowed by the law. These investors will be allowed to keep millions of pounds of disputed tax relief, regardless of the outcome of a tax tribunal next year.

The news has prompted anger, with Commons Public Accounts Committee chair Margaret Hodge saying: "It is shocking that HMRC will be forced to pay out millions of pounds to tax avoiders."

Meanwhile, David Beckham is among a list of big names in entertainment, sport and finance expecting letters from the authorities demanding payment of disputed tax bills, says the BBC.

A new finance bill will become law in the coming weeks, handing HMRC powers to make 33,000 people who invested in tax avoidance scheme pay disputed revenue upfront, ahead of the settlement of any legal challenges.

Among those affected are football legend Beckham and business figures such as Centrica chief Sam Laidlaw and former London Stock Exchange boss Clara Furse. They will be given 90 days to pay up under the new law.

An HMRC spokesman describes the new rule as a "game-changer", but the tax authority continues to press for additional powers. Most controversially, it wants the right to take money directly from individuals' bank accounts.

The tax authorities say they needs this power in exceptional circumstances when undisputed bills are left unpaid by "recalcitrant debtors". That proposal is currently undergoing a consultation process that ends in three weeks. It could become law next year.

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