Tax Avoidance Crackdown.

An HMRC drive to crackdown on tax avoidance could see advisers challenged if they set up offshore tax entities for clients. The Revenue wants to prevent UK traders and professionals from avoiding tax by arranging for their UK business profits to accrue in entities resident in territories with a nil or low tax rate. The new measures, which could impact up to 10,000 wealthy individuals, are expected to bring in up to £50m a year in tax receipts.

HMRC have successfully challenged overseas arrangements and recovered significant amounts of tax, but doing so takes considerable time and resource.

To reduce that burden, it wants to introduce legislation which targets offshore schemes directly, especially those which benefit smaller companies and individuals. New proposals, expected to come into effect in April 2019, will see the government tighten up on where professionals house their profits.

Examples of the types of arrangements HMRC will target include UK residents who move their profits to an offshore vehicle, which is paid from the individual’s earnings because of a service contract or because it invests in a partnership through which the individual trades and is entitled to a return.

Another proposal is to introduce requirements to notify the Revenue of the use of such arrangements and for faster payment of tax in dispute.

We have also seen a total of 129 top footballers being investigated by HMRC over £250 million worth of investments in a tax avoidance scheme, according to the Mirror.

The footballers include a former Manchester United star who invested £33.5 million, a mix of his own money and a bank loan, in a film-based project that allowed him to significantly reduce the duty he paid on his Premier League salary. A Liverpool player is also believed to have put forward £10.4 million to avoid taxes on his salary. HMRC is now trying to claw back at least 70% of the amounts put in, plus interest and fines, meaning they are likely to repay close to what they put into the scheme.

A source told The Mirror: ‘There is a deep sense of shame attached to this group. They are high-profile figures, international footballers. None of them knowingly embarked on a plan to pay less tax.’


The scheme worked by offering tax relief on money invested in films such as the Disney hit Enchanted, and were popular from 2000-2004 when the Labour government supported British film makers with tax breaks. An investor could be asked to pay £100,000 into the scheme, which would then be boosted by a bank loan of £900,000, taking their total investment to £1 million. They could delay paying tax on all of this money for the duration of the scheme, often 15 years.


It comes after Wealth Manager revealed that a number of former Premier League footballers are suing Coutts and connected IFA firms for being in ‘joint enterprise’ with their advisers over a controversial property scheme that left a raft of stars with substantial losses.

The above examples demonstrate the difficulty of choosing a good adviser. We get approached regularly by tax advisers with “specialist” schemes. It is a game they play to stay one step ahead of the revenue. When one scheme is closed there is another that they prepared earlier waiting to go. Our clients don’t want the hassle of being targeted by HMRC let alone the risk of fines and penalties. There are plenty of scope to reduce taxes via main stream and boring pensions & ISA, as well as more adventurous VCT, EIS and AIM investment.

Richmond House Wealth Management has specialist knowledge in all these areas and more. Call us now for a free no obligation meeting.

This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case. Based upon our understanding of UK tax law at April 2018. The value of investments can fall as well as rise and you may not get back the full value of your investment


John Merrifield.

Dip PFS, Cert (CII) MP.