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Advisers face huge fines for promoting tax avoidance schemes

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Accountants or advisers who assist in tax avoidance schemes could face fines of 100 per cent of the tax that was avoided under proposed Government rules.

According to the BBC, the proposed sanctions include offshore tax havens and it is hoped the suggested measures would identify tax avoidance at the source.

Currently people who advise on tax face little risk of sanction, while their clients are liable for penalties if they lose in court.

Treasury financial secretary Jane Ellison says: “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.”

The rules, which also include measures to make it easier to impose penalties when avoidance schemes are beaten, are expected to be published today as part of a Government consultation.

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Comments

There are 17 comments at the moment, we would love to hear your opinion too.

  1. Why has this taken so long to happen?

  2. Oh goody !!!

    Now we are getting fined for something that technically isn’t illegal !

    Avoidance or evasion, that is the question ?

  3. Does that include pensions and ISAs ?
    They are of course tax avoidance along with many other allowances. We have always worked on the basis, each individual is allowed to arrang their affairs in such a way, to reduce the burden of taxation.
    Are these more police state rules, or left wing ideology.

  4. The devil will be in the detail, what classes as a tax avoidance scheme? Hopefully it will only relate to investments that have not been sanctioned by the Chancellor, and we can safely promote SEIS, EIS, VCTs,BPR and BPRA which do “avoid” tax. It is taken as read that pensions and ISAs are acceptable because of the relatively small investment limits.

  5. I was going to say ‘about time’ and frankly, such schemes which abused the tax regime and laws that existed already should see some fines levied retrospectively.

  6. @ Steve D
    Probably not enough public pressure before and so many of the MPs had their money offshore. Probably been covering their tracks since the Cameron fuss.

  7. @ Steve, I would imagine it’s because the very rich who use these schemes are also the ones who make all the rules. Thanks to increased transparency and relentless media reporting they have to be seen to do something now, thankfully.

  8. This has two sides.
    Side one: Greedy advisers charging huge amounts for flaky advice.
    Side two: If you are that rich then the advice is easy and fairly cheap – emigrate – Monaco, Andorra, San Remo, Malta; even Eire. . For companies there are some US States that treat corporations very favourably. Or you can P Green! Shares in wife’s name, wife in a tax haven – dividends to wife and a relatively modest salary for hubby (or not being sexist – vice -versa).

    In the modern internet age it is perfectly possible to work from almost anywhere. Personally I don’t understand why the Greens don’t live on their super yacht outside territorial waters and pay no tax at all to anyone.

  9. Right – tax avoidance is legal – tax evasion is not. Who is Jane Ellison (I know who she is). “People who peddle”. It is our job to make people aware of tax avoidance measures – like paying into their pension anything earned over £100K – 67% tax relief just as one quick example. Offshore doesn’t always mean covert and illegal. Hang on it’s August….must calm down (but we do need to be clearer).

  10. It appears that tax avoidance has become tax evasion by stealth even though it was supposed to be ‘legal’! Clarification is now needed of what is acceptable tax mitigation and therefore what is not. A rewrite of the tax rules would go some way towards this too.

  11. Andrew Devonshire 17th August 2016 at 12:47 pm

    schemes will juts go offshore to places with no extradition treaty of which there are many – tax evaders will still plot to evade.

  12. So fed up with people not understand tax avoidance. Keep telling people I know if they have ISA’s and Pensions they are doing the same thing. But no, because its not millions they are right but other people not allowed to manage their affairs sensibly.

  13. To everyone who is arguing against this on the grounds that “tax avoidance is legal and evasion is not”, I respectfully suggest that you need to move out of the 20th Century and into the 21st!
    The landscape is now three-dimensional: tax evasion is still tax evasion and illegal; but what was once all lumped together as “tax avoidance and legal” has now been sub-divided.
    The legal part of tax avoidance is now more accurately referred to as tax planning. This is the straightforward use of clearly set out reliefs and allowances laid down by Parliament to achieve specific policy objectives. This includes pension planning, ISAs, VCT, EIS, SEIS, BPR, as well as the new art of reorganising a person’s income and investments to make maximum use of the new Dividend Allowance, Personal Savings Allowance, and maximise the IHT efficiency of their pensions. All of the above typically involve encouraging investment into legitimate vehicles predominantly with the client’s own money.
    “Tax avoidance” (or more often “Aggressive Tax Avoidance”) has now been redefined to mean the artificial use of several (usually) unconnected pieces of the tax legislation to achieve an artificial tax saving by the client, usually for little or no commitment of their own money, and usually with little or no investment in actual assets.
    As financial advisers and planners, we should be rejoicing at this legislation as it means that we should be able to advise clients on a greater part of their wealth.
    I’m in favour!

    • I’m in complete agreement, I genuinely go by the rule that if it isn’t in the spirit of the legislation then it’s likely to be aggressive tax avoidance. Look forward to all being clarified.

  14. @Kevin. Do you mean that this is part of 21st Century bleeding heart and political correctness? If it isn’t illegal and manages to take advantage of loopholes, then it isn’t the advisers who are at fault, it is the legislators for being sloppy.

    We didn’t ask for film partnerships. This was a government idea. As were all the other loopholes and tax breaks.

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