Sipp and platform provider James Hay Partnership is facing a £1.8 million tax charge over its biofuel investment scheme “Elysian Fuels” in the latest tax avoidance scheme to be investigated by HMRC.
Elysian Fuels was a non-standard investment scheme set up by Future Capital Partners (the same firm behind the widely-publicised “Eclipse 35” film tax scheme that Sir Alex Ferguson and other celebrities paid into). It was promoted as offering returns up to ten times the original investment over eight years. HMRC is concerned about the tax relief claimed by investors who sold their shareholding to their Sipp. Sports stars including former Liverpool manager Rafael Benitez and snooker player Stephen Hendry are investors.
The latest investigation offers further evidence (if it were needed) of HMRC’s increased focus on corporates and individuals who administer and promote tax avoidance schemes. The targeting of so called “enablers” is key to HMRC’s enforcement and compliance strategy. The last year has seen the implementation of a raft of new measures and legislation aimed at deterring and punishing enablers who advise on aggressive schemes or structuring. Chief amongst these are civil penalties for enablers who assist, encourage or facilitate someone else's offshore tax evasion or careless non-compliance (as per the Finance Act 2016) and the new corporate criminal offence of failure to prevent the facilitation of tax evasion in the UK and abroad (as contained in the Criminal Finance Act 2017). See our related blog here.
With ambitious targets to raise an additional £5 billion per year “by tackling tax avoidance and aggressive tax planning, evasion and non-compliance” and a pledge to prosecute 100 “wealthy individuals and corporates” by 2019/20, HMRC is under pressure to deliver. Those who promote, advise on and invest in tax avoidance schemes are particularly vulnerable as HMRC’s aggressive approach shows no sign of abating.