HMRC is planning a raid on tens of thousands of contractors who were engages in offshore tax avoidance schemes, to try and recoup £3.2bn in unpaid tax. A complex arrangement of loans and trusts based overseas allowed a large number of individuals to avoid paying tax, 50,000 of which are now being investigated by HMRC. Whilst the schemes were popular in the early 2000s, the high-profile collapse of Rangers football club saw them outlawed by 2010.
HMRC are giving the individuals who used such schemes until April 2019 to declare and settle their affairs. With most of the contractors involved using the schemes for at least two years, they face a daunting prospect of facing a charge greater than the overall tax liability. This is because the outstanding amounts due over the entire duration of the scheme will be accumulated and tax in a single year.
It is believed that the average bill will be around £64,000 which has raised concern and anger amongst the individuals involved, many of which claim that because the schemes were not illegal at the time, they are in effect being taxed "retrospectively". Of the 20,000 contractors who have expressed interest in settling and the 25,000 yet to either settle or express an interest, there will be a significant portion potentially facing bankruptcy, although exact figures are unclear.
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