Chancellor Rachel Reeves has made it clear: tax evasion will be dealt with swiftly and strictly this year. HMRC is teaming up with Companies House and the Insolvency Service to tackle a tax evasion tactic known as ‘phoenixism’. Simply put, phoenixism occurs when directors close down insolvent companies to avoid paying taxes and then start new businesses under a different name. This practice is costing the system and will be closely monitored.
Here is what’s being planned:
- New companies suspected of phoenix activity will be required to pay taxes upfront.
- Directors will be held personally liable for their company’s unpaid taxes.
- Expect harsher penalties for those caught practicing phoenixism, including fines, director disqualification, and even prosecution.
A particular area of focus will be offshore tax non-compliance. HMRC is hiring experts with experience in private sector wealth management and using AI to find any hidden funds.
New Reward Scheme for Reporting Tax Fraud
HMRC is bringing in a new way to encourage people to report tax fraud. If you know about big companies or wealthy individuals not paying their taxes, or about dodgy tax schemes, you could get a reward for telling HMRC. This scheme will start later this year.
