Advisers say they want clarity around what is acceptable and non-acceptable tax avoidance after the Government announced plans to fine those promoting tax avoidance schemes.
Earlier this week, a consultation from HM Revenue & Customs set out plans to clamp down on advisers in its list of “tax avoidance enablers”.
It proposed penalties for those found to assist in avoidance schemes of either 100 per cent of the tax evaded or £3,000 – whichever is higher.
The consultation follows a Budget pledge that will see the Government attempt to raise £12bn by 2020 through cracking down on tax avoidance.
Advisers welcome HMRC’s proposals but say there needs to be more clarity around what is acceptable tax and avoidance and what is not.
Yellowtail Financial Planning managing director Dennis Hall says: “Some clarity would be helpful and some examples of what is or isn’t a breach.
“They have tried to do that in the past but there is still some confusion in people’s minds. The closer you get to something that is not illegal but is probably frowned on by [HMRC] is the area of biggest confusion and that needs some clarity, especially if people are now going to get fined for it.”
Philip J Milton & Company managing director Philip Milton says: “What they are talking about are the things that have never really been allowed. Up until recently, advisers, accountants and others have been pushing the boundaries.
“Am I a ‘tax avoidance enabler’ if I encourage my client to put money in a pension or an Isa or to give money to charity? These are all things that are legitimate tax avoidance practices.”
But Lift Financial chartered financial planner Kevin Neil says the consultation will help better distinguish tax evasion, tax avoidance and non-contentious tax avoidance.
He says: “We now have a tax landscape that is three dimensional. You have tax evasion which is still illegal but with the legislation, and the decisions that are getting handed down as HMRC pursues some of these schemes, there are clearly laid down tax reliefs that are available that parliament has created within legislation to address specific issues.
“That part laid down by parliament should be referred to as tax planning because it is legitimate and non-contentious.”