Tax avoidance enablers to face tough new penalties

18 August 2016

Accountants, tax planners and advisers who provide advice on how to avoid tax could have to pay a fine of up to 100 per cent of the tax the scheme’s user underpaid.

As announced at Budget 2016, enablers of tax avoidance will face tough penalties under new proposals being consulted on by the government.

A discussion document has been published - Strengthening tax avoidance sanctions and deterrents which proposes a new penalty for those who enable tax avoidance and changes to the existing penalty legislation which applies to those who use avoidance which is defeated.

Currently tax avoiders face significant financial costs when HMRC defeats them in court. However, those who advised on, or facilitated, the avoidance bear little risk. The government is acting to make sure that tax avoidance is rooted out at source and this action will target all those in the supply chain of tax avoidance arrangements.

The Financial Secretary to the Treasury, Jane Ellison 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 document also clarifies the rules around whether proven tax avoiders have taken reasonable care to ensure their tax returns do not contain inaccuracies, making it simpler to enforce penalties when avoidance schemes are defeated.”

This consultation closes at 12 October 2016 11:45pm