Fines for tax avoidance enablers to raise over £100m

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The Government expects the tax take from penalties imposed on tax avoidance “enablers” to reach £115m by 2021/22, Budget documents show.

In the spring Budget announcement today, Chancellor Philip Hammond reaffirmed that professionals who enable a tax avoidance arrangement that is later defeated by HMRC will be subject to financial penalties from July.

In a consultation paper published last August, HM Revenue & Customs included IFAs within its proposed definition of a tax avoidance “enabler” because it says they can benefit through fees and commissions by marketing avoidance schemes.

The penalty for enablers of tax avoidance schemes will be either 100 per cent of the tax evaded, or £3,000, whichever is higher.

According to today’s Budget document, the Government expects to generate £10m from the penalty in 2017/18, £50m in 2018/19, £20m in 2019/20, £20m in 2020/21 and £15m in 2021/22.

The document also confirmed the Government will remove the defence of having relied on non-independent advice as taking ‘reasonable care’ when considering penalties for a person or business that uses a tax avoidance arrangements.

Prudential senior technical manager Graeme Robb says: “This continues the theme of previous budgets and reinforces the government’s desire to clampdown on often complex tax avoidance strategies. These arrangements are a world away from tried and tested mainstream tax planning solutions carried out by the vast majority of advisers on behalf of their clients.”