On 25 February 2022 the UK Finance Act 2022 received the Royal Assent. The Act includes a number of further measures to combat promoters of tax avoidance schemes.

HMRC powers

HMRC is being given the power to present a winding-up petition to the court in a situation where it considers that a company or partnership is acting contrary to the public interest because it is involved in the promotion, management or facilitation of tax avoidance. HMRC will also have more powers in relation to publication of information on tax avoidance schemes; on persons that it suspects are promoters of avoidance schemes or persons connected to them; or on other persons that were involved in creating the avoidance schemes.

The Act introduces a power enabling HMRC to apply for an order to freeze the assets of relevant persons if it has begun legal proceedings for a penalty to be imposed by the tribunal under the legislation for disclosure of tax avoidance schemes (DOTAS); disclosure of tax avoidance schemes for VAT and other indirect taxes (DASVOIT); promoters of tax avoidance schemes (POTAS); or enablers of defeated tax avoidance. HMRC is also being given the power to issue a penalty to UK-based entities that are involved in facilitating tax avoidance schemes with non-resident promoters.

Discovery assessments

With effect from the date of Royal Assent there are changes to the rules on discovery assessments that will permit HMRC to recover tax lost if it discovers that certain charges, including the high-income child benefit charge, certain pension charges or gift aid, have not been accounted for.

Public interest business protection tax

The Finance Act 2022 includes legislation for a public interest business protection tax. This tax is being introduced for one year only, but it could be extended until 2025. The tax would apply to profits arising when a business realises a valuable asset for the benefit of the business and its shareholders, but as a result this causes or hastens the collapse of a licensed gas and energy supplier. The scope of the tax could later be widened to include other types of public interest business.

Assets covered by the legislation include contractual rights, forward purchase agreements and derivative financial instruments. The tax would be charged at 75% on the asset’s adjusted value (i.e. the underlying value of the asset reduced by 10%).

The first tax returns under this legislation are due within 30 days of the date of Royal Assent.