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Spring Budget announces measures to crack down on business crime and benefit fraud (9 March 2017)

Date: 09/03/2017
Duncan Lewis, Legal News Solicitors, Spring Budget announces measures to crack down on business crime and benefit fraud

The government has announced a number of measures in the Spring Budget 2017 to combat tax avoidance, financial fraud and benefit fraud and errors.

Chancellor Philip Hammond announced to Parliament on Wednesday that new legislation will ensure that promoters of tax avoidance schemes (POTAS) cannot circumvent the POTAS regime by re-organising their businesses, either by sharing control of a promoting business – or putting a person or persons between themselves and the promoting business.

This will ensure that HMRC can apply the POTAS regime as intended, said the Chancellor.

As announced in the Autumn Statement 2016, the government will also introduce a new penalty for any person who has enabled another person or business to use a tax avoidance arrangement that is later defeated by HMRC – this new regime reflects an extensive consultation and input from stakeholders, according to the government.

The government will also remove the defence of having relied on non-independent advice as taking “reasonable care” when considering penalties for a person or business using such arrangements.

The government will also remove the ability for businesses to convert capital losses into trading losses from 8 March 2017, to eliminate unfairness in the tax code which is being exploited by certain businesses.

The government is to introduce a 25% charge on transfers to qualifying recognised overseas pension schemes (QROPS) This charge is targeted at those seeking to reduce the tax payable, by moving their pension wealth to another jurisdiction. Exceptions will apply to the charge, allowing transfers to be made tax-free where people have a genuine need to transfer their pension, including where the individual and the pension are both located within the European Economic Area.

The government will remove the VAT use and enjoyment provisions for business to consumer mobile phone services to individuals, to resolve the inconsistency whereby UK VAT is applied to mobile phone use by UK residents when in the EU, but not when outside the EU. The move will also ensure mobile phone companies cannot use the inconsistency to avoid UK VAT – and will bring UK VAT rules into line with the internationally agreed approach.

The government says it will consult on options to combat missing trader VAT fraud in the provision of labour in the construction sector, in particular – applying the reverse charge mechanism so the recipient accounts for VAT.

Building on the measures introduced in Budget 2016, the government will also shortly publish a call for evidence on the case for a new VAT collection mechanism for online sales, which would harness technology to allow VAT to be extracted directly by the Exchequer from online transactions at the point of purchase.

HMRC is also actively monitoring National Insurance Employment Allowance compliance, following reports of some businesses using avoidance schemes to avoid paying the correct amount of NICs. The government will consider taking further action in the event that this avoidance continues.

As announced by the Secretary of State on 9 February 2017, the Department for Work and Pensions (DWP) will recover a volume of HMRC tax credit debt using its existing powers, including the use of Direct Earnings Attachment –the DWP will also work in partnership with an external data provider to better identify benefit fraud and errors caused by undeclared partners.

Duncan Lewis Business Crime Solicitors

Duncan Lewis Business Crime Solicitors can advise at any stage of a business offence, including at the start of an investigation and before charges are brought.

Our specialist business crime solicitors advise on false accounting, failure to keep adequate records, breach of bankruptcy restrictions, embezzlement, VAT and tax evasion, misrepresentation, company fraud, financial fraud and white collar crime.

Duncan Lewis Solicitors can liaise with investigating authorities, including HMRC, The Insolvency Service, SFO, FCA, BEIS, City of London Police and DWP.

There are Duncan Lewis offices across England and Wales – and a Duncan Lewis criminal defence lawyer can usually reach a police station for interview under caution within an hour. Duncan Lewis is a leading provider of Legal Aid criminal defence services.

Duncan Lewis can also advise on Confiscation Orders under the Proceeds of Crime Act (POCA).

For expert legal advice on all business offences, call Duncan Lewis business crime solicitors on 0333 772 0409.

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