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HMRC turns attention to horsebox owners in evasion clampdown

Horsebox owners dishonestly claiming horseboxes worth hundreds of thousands of pounds as company expenses are set to be the subject of HM Revenue & Customs investigation, as it continues its clampdown on tax evasion.

Top 50 firm UHY Hacker Young believes HMRC suspects some farmers and rural business owners of buying horseboxes through their company, either falsely claiming the cost as a business expense for tax purposes, or failing to declare personal use of the horsebox and paying tax on it as a “benefit in kind”.

Horseboxes can be valuable assets, with the one used by Zara Phillips at the 2012 Olympics valued at around £500,000 – albeit complete with capacity for six horses and its own bedroom, kitchen and living room complete with satellite television. There is no suggestion that Phillips has evaded tax.

HMRC officials can now identify connections and discrepancies between an individual or company’s official tax records and information from multiple third party sources via the department’s computer system, Connect.
UHY Hacker Young says that HMRC uses DVLA databases, and even Google Streetview, to monitor the lifestyle of suspected tax evaders.

UHY Hacker Young partner Charles Homan said: “Underpaid tax relating to horseboxes is a drop in the ocean but HMRC seems to be focussing attention in this area because they can now be such valuable assets.”
“It shows how determined HMRC are to close down every little loophole and capture every mistake made in tax returns. Without the correct documentation, even owners of horseboxes who have done nothing wrong could find themselves on the receiving end of a lengthy and uncomfortable tax investigation.”

Story from Accountancy Age

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P&O avoidance scheme scuppered

P&O has failed in a bid to use a complex international tax avoidance scheme to avoid UK corporation tax.

The British shipping and logistics company aimed to get an extra £14 million in tax relief by artificially boosting the credit due for tax paid on dividend income.

But HM Revenue and Customs (HMRC) successfully challenged the scheme in the First Tier Tribunal, which ruled that the transactions were all part of an “elaborate trick” designed to exploit the rules.

The Tribunal ruled: “It is clear that the scheme would only work so long as every participant in it was either a captive company or a stooge employee of a company within the P&O group.” It also found that it was “designed and implemented for no reason other than tax avoidance.”

David Gauke, Exchequer Secretary to the Treasury, said:

“I’m delighted that HMRC has successfully defeated this attempt by a major company to artificially reduce its tax bill by exploiting an extremely complex international financial structure.

“The Government has made it very clear that we won’t put up with aggressive tax avoidance and we have resourced HMRC to take on even the most complex and convoluted schemes, as this Tribunal decision shows.”

In total, £154 million of tax was protected. The legislation being exploited by P&O was repealed in 2005 to prevent such practices.

The case is Peninsular & Oriental Steam Navigation Company v Commissioners for HM Revenue and Customs [2013] UKFTT 322 (TC). The decision is available here.

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