HMRC’s Serial Tax Avoidance Regime (STAR)

Bristol taxation expert Anton Lane has warned tax avoiders to disclose illicit schemes quickly or potentially face punitive fines from HMRC.

Mr Lane, a Chartered Tax Adviser, who is managing director of Hambrook-based Edge Tax, has warned about HMRC’s Serial Tax Avoidance Regime (STAR), the deadline for which comes into effect on Thursday April 6.

Under the regime anyone – including individuals, partnerships, companies or associates – using avoidance schemes which have been defeated by HMRC could face sanctions, fines or public naming and shaming if they haven’t begun rectifying the issue by the deadline.

Penalties can range from 20 per cent to 60 per cent of the unpaid tax, or the offender could also be issued with a warning notice where they have to provide additional information for a period of up to five years.

HMRC is also threatening to name and shame individuals as well as restricting the use of certain tax reliefs in the future.

Mr Lane said: “Only HMRC could name new the penal measures STAR! The deadline actually doesn’t give those people that may be caught within the Serial Tax Avoidance Regime that long to start the process of rectifying what they have done wrong.

“STAR could apply where you have only used one scheme or if you have used many. And if you’re still using a tax avoidance scheme that could be caught within the Serial Tax Avoidance Regime then unfortunately you will be excluded from being able to prevent action.

“So it’s quite important for people that are using avoidance schemes to seek some independent professional advice to see whether they are caught in this to avoid name and shaming, higher penalties and obviously the other restrictive sanctions that the Serial Tax Avoidance Regime could place upon them.”

The new regime was introduced by the Finance Act 2016. It relates to monies placed under defeated schemes which are defined as when one five conditions are met:

• The tax advantage of the scheme has been counteracted under the Finance Act 2013 and that counteraction is final
• A follower notice has been issued in relation to the arrangements
• The arrangements are disclosable under the Disclosure of Tax Avoidance Schemes (DOTAS) legislation
• The arrangements are disclosable VAT arrangements to which the taxpayer has been a party
• The arrangements are disclosable VAT arrangements to which a supplier to the taxpayer has been a party and to which the taxpayer might be expected to get an advantage

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