Our Vision and Strategy

HMRC aims to ensure UK society's financial well being. We know most people and businesses want to pay what they owe and claim only what they are due, and society – our customers – value the job we do, including dealing firmly with those who intentionally avoid their responsibilities.

AAG has an important role in delivering the aims of HMRC and its Compliance Strategy. We work with colleagues across HMRC to help build a better relationship with our biggest taxpayers and to help design and deliver policies which do not provide opportunities for avoidance. Our customers want our actions to be fair, and to be seen to be fair, giving them confidence that we understand them and are responding to their expectations. This helps secure the sustained support of the vast majority of those who comply with their tax and duty obligations, and do not engage in avoidance. And it contributes to the goal of making the UK an excellent place to do business.

Strategy

We will deliver HMRC's Anti-Avoidance strategy which implements our vision by:

• making tax law robust against avoidance
• engaging with our customers about our approach to avoidance
• optimising our operational response to avoidance; and
• changing the economics of avoidance to make it less attractive.

We will also maintain and improve the VAT Partial Exemption regime to enable all partly exempt businesses to recover the right amount of input tax, timeously and consistently, and with the minimum of administrative burdens and HMRC resource.

Why tax avoidance is a problem for everyone

The Government, HMRC, and HMT have a shared objective of minimising the tax gap (that is, the difference between the tax collected and the tax we think ought to be collected) within the context of wider Government agendas. We want to provide our customers with a level playing field while maintaining the UK's international competitiveness. Our strategy for delivering this objective is through encouraging everyone to pay the right tax at the right time, and vigorously tackling those who deliberately avoid their responsibilities.

In the UK, the tax loss from avoidance is estimated to run into several billion pounds across both direct and indirect taxes. This directly affects the delivery of public services and long-term economic growth. Avoidance distorts markets, is economically unproductive and breaks the link between economic productivity and reward.

The vast majority of our customers do not participate in tax avoidance and will stand to benefit from HMRC's anti-avoidance strategy. HMRC is taking a proportionate, risk-based approach to avoidance, which is consistent with HMRC's commitment to supporting our customers.

What is tax avoidance?

AAG offers guidance about what factors indicate that tax avoidance may be occurring. It is impossible to provide a comprehensive definition of avoidance – HMRC's guidance describes the sorts of activity that it may perceive as avoidance.

Based on an understanding of the guidance, our customers ought to be aware when they are undertaking activities that HMRC may regard as tax avoidance and thus taking on higher risks.

Our actions to achieve our strategy will include the following.

• We will quickly and expertly prevent and close down avoidance by effective legislation
• We will engage with our customers about how we address avoidance
• We will know what avoidance schemes or bespoke arrangements are being marketed and used
• We will know which organisations and individuals are more likely to carry out avoidance and organise our resources accordingly
• We will treat those who avoid their tax obligations as higher risk than organisations and individuals who do not
• We will be proactive at challenging avoidance by investigation and effective litigation
• We will take a strategic approach in litigating avoidance cases

We will measure progress by:

• observing any identifiable changes in the avoidance tax gap;
• collecting and examining qualitative and anecdotal evidence;
• identifying process efficiencies (such as improvements in the robustness of budget measures) and cost savings; and
• baseline measurement of perception of risk and monitoring of changes.

AAG will lead the implementation of this strategy, but its success will depend on active engagement with our customers and collaborative working:

• across HMRC;
• with HMT; and
• internationally through the Joint International Tax Shelter Information Centre, OECD and the European Union.

AAG and the Review of Links with Large Business (The Varney Review)

HMRC's actions to counter avoidance receive sustained support from the vast majority of those customers who comply with their tax and duty obligations, and do not engage in avoidance; and those customers continuing to engage in avoidance are clear about what to expect from HMRC as a result.

A key proposal of the Varney Review is to improve clarity and bring greater certainty for customers. To keep customer focus at the heart of our work, we will continue to:

• Seek an open dialogue with all our customers to help them meet their obligations with certainty.
• Foster a consistent approach throughout HMRC towards identifying and dealing with avoidance risk so that we are fair and consistent in our response to the minority who engage in such schemes.
• Ensure that AAG's guidance is clear and anti-avoidance measures well-targeted, so that customers benefit from clarity and certainty.
• Ensure that people understand the implications of using an avoidance scheme.
• Maximise our professional and commercial skills.