HM Revenue & Customs plans to fine “cowboy advisers” up to £1m for recommending aggressive tax avoidance schemes to their wealthy clients.
The Times reports a Government consultation is planned to be published today which would see HMRC given new powers to pursue financial advisers and accountants who set up such schemes.
Under the proposals, HMRC will be able to publicly identify advisers and accountants who advise on certain schemes and will be able to demand information from them at an early stage about the products they are marketing. The Times says HMRC believes there is a core of about 20 tax specialists that promote the most controversial schemes.
Advisers and accountants who fail to co-operate with HMRC face fines of up to £1m. Individuals and businesses who use the schemes will also face penalties, and anyone who uses a tax avoidance scheme successfully challenged in court will have to pay the tax owed plus additional fines.
The Government will consult on the measures until October. HMRC is said to lose £5bn each year to tax avoidance.
Treasury exchequer secretary David Gauke says: “The proposals in this consultation will allow HMRC to further close in on the cowboy advisers promoting these high-risk schemes.”
The proposal comes as Deloitte UK chief executive David Sproul says a number of companies the firm had been advising about a move to the UK have put their plans on hold as a result of mixed messages on tax.
He says there is a disconnect between the Treasury’s aims of attracting firms to the UK by reducing corporate tax rates and the House of Commons public accounts committee’s attempt to “determine what the fair share of tax is” for large companies.
The PAC’s chair, Labour MP Margaret Hodge recently told a Google executive who was giving evidence to the committee that the firm was “doing evil” with their tax arrangements.
Sproul says: “On the one hand, you have got a government pursuing a tax strategy to make the UK one of the most completive regimes. But then you have got a push by the PAC and by others to say, separate to that, we want to make sure everyone is paying their fair share of tax and we will determine what that fair share of tax is. The real challenge is trying to reconcile those two things.
“If you are in America, you would think this Margaret Hodge seems to be setting the law”.