BUDGET 2017: Bankruptcy impact of new anti-avoidance tool needs government consideration

With £820million of new anti-tax avoidance measures announced in today’s Budget, Andrew Tate, president of insolvency and restructuring trade body R3, says: The government needs to think more carefully about the impact its anti-tax avoidance tools have on those individuals affected. Tackling the abuse of the tax system is needed, but efforts to do so should not tar everyone with the same brush, while inflexibility can have disproportionate or unproductive outcomes. Attention should be given to how people can pay new tax demands, especially if their ‘avoidance’ is the result of a simple mistake, naivety, or poor advice.”

 “Penalties for tax avoidance won’t bring in extra money if people don’t have the money on hand to pay them. The receipt of an Accelerated Payment Notice (APN) can force people into bankruptcy if they have no means to pay the bill on demand. The government may need to be open to alternatives to bankruptcy, like IVAs, if people can’t pay bills when due.”

 “An understanding that not everyone who has been involved with, for example, a film scheme has been deliberately seeking to avoid tax would help. Some people have become involved in such schemes unwittingly or following what they believed to be professional and reliable advice. Businesses are also significant recipients of APNs, which can put jobs and livelihoods at risk.”

• In June 2016, 16% of respondents to an R3 member survey said they had offered advice to an individual who had received an Accelerated Payment Notice.
• 1.5% of respondents to the same survey said they had already been appointed as an Office Holder in an individual’s insolvency triggered by an Accelerated Payment Notice.
• 26% of respondents said they had offered advice to a business which had received an Accelerated Payment Notice.
• 12% said they had already been appointed as an Office Holder in a corporate insolvency triggered by an Accelerated Payment Notice.