Advisers face hefty fines in HMRC tax avoidance crackdown

Added 17th August 2016

Tax advisers and accountants in the UK who help clients avoid paying tax could face fines of 100% of the tax avoided, according to new proposals being considered by HM Revenue and Customs (HMRC).

Advisers face hefty fines in HMRC tax avoidance crackdown

The UK tax office published a consultation paper on Wednesday morning which lays out plans to punish advisers found guilty of helping their clients dodge tax - including via offshore tax havens - by issuing them with hefty fines of up to 100% of the underpaid tax.

Under the current system, clients found guilty of using tax avoidance schemes face penalties from HMRC while their advisers face very little risk.

However, according to the proposals any financial adviser taking a fee to refer their clients to a tax avoidance scheme, could be fined for their part as an "enabler of tax avoidance". 

Jane Ellison, financial secretary to the UK Treasury, said: “People who peddle tax avoidance schemes deny the country of vital tax revenue and this government is determined to make sure they pay.

“The vast majority of their schemes don’t work and can land their users in court facing large tax bills and other costs.

“These tough new sanctions will make would-be enablers think twice and in turn reduce the number of schemes on the market.”

The consultation will run until 12 October, with the HMRC predicting the new measure will add £12bn  to the Treasury coffers.

‘Social good’

George Bull, senior tax partner at tax advisory firm RSM, welcomed the move, describing the fine as a “social good” that will raise the reputation of the industry.

“Honest tax advisers who don’t indulge in artificial tax avoidance will welcome this to stamp out on abusive tax schemes which will improve the reputation of the profession.”

“Many of these schemes stood little hope of success right from the outset but some advisers would have sold their clients the hopes which are unrealistic.

“So there is almost a social good in this, in that it will stamp out this undesirable aspect of tax schemes which give people false hope,” he said.

However, Bull expressed concern that the penalties should not be used to punish tax advisers involved in genuine disagreements with HMRC over certain tax arrangements.

“I think it’s really important that HMRC don’t try to impose 100% penalty on an honest, professional and reliable tax adviser where there has been a legitimate disagreement over the interpretation of law which is being used for the purposes people thought it was there for only to have the courts say ‘no, sorry we side with the HMRC over you, the adviser’,” he added.

Panama Papers

The proposals come after the British government promised a tougher crackdown on tax avoidance following the 'Panama Papers' leak in April.

More than 11 million documents, leaked from Panamanian law firm Mossack Fonseca, lifted the lid on how the rich and powerful around the world use offshore tax havens to hide their wealth.

Following the scandal, the-then prime minister David Cameron announced a new tax evasion law which makes companies criminally liable for employees who aid tax evasion.

Five largest economies in the European Union, the UK, Germany, France, Italy and Spain, also agreed to share information on secret owners of businesses and trusts.

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About Author

Monira Matin

Senior Reporter

Monira joined International Adviser in March 2016 from Informa Global Markets where she worked as a eurobond reporter for over two years, covering fixed income markets. She has previously held a number of editorial positions covering politics, insurance and technology. Monira has a degree in Journalism and Economics from City University.



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