The news comes after tax experts called on HM Revenue & Customs to redraft proposed legislation on penalties for tax agents after fears that advisers could be caught and concerns over the short timeframe for responses.
HMRC published the draft legislation on February 8 and set the deadline for responses as March 3, but has now pushed this back to April 28 following pressure from industry bodies.
The change follows an urgent meeting called by the Institute of Chartered Accountants of England and Wales and the Chartered Institute of Taxation with HMRC.
Yesterday, The Tax Advice Network chairman Mark Lee warned that IFAs could be hit by penalties for giving tax adviceunder the draft legislation which he says extends HMRC’s influence to penalise anyone who talks to clients about reducing tax liabilities.
Experts say the draft legislation appears to apply not just to illegal actions but to any advice that could lead to a tax loss to the Treasury – such as suggesting someone take out an Isa.
The penalties could be as much as 100 per cent of the tax saved by the client as a result of the advice.
The CIOT says the way the legislation has been drafted could theoretically mean a newspaper writing a ‘top 10 tax tips’ feature or someone offering tax advice as a friend or a welfare adviser would be likely to be breaking the law.
HMRC insists the legislation is not intended to catch honest advisers, but rather those engaging in fraud or dishonesty, but Mark Lee warns that “anti-terror laws are already used in circumstances way beyond their original intent” and says that “sadly, it is much the same with tax law”.
CIOT president Andrew Hubbard says: “We are pleased to note that HMRC have moved quickly to respond to the concerns which we raised about the draft legislation.”
An ICAEW spokeswoman says: “HMRC confirmed that the intention was to provide legislation that reflected what was said in the December 9 2009 consultation document and that it is only intended to apply to those who have been involved in what amounts to fraudulent or dishonest behaviour.
“Following our meeting, HMRC appreciates that the draft legislation has caused major concerns.
“It has agreed to extend the consultation deadline so as to allow time for further examination of the legislation.”