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Advisers warned not to fall foul of HMRC tax avoidance ‘enabler’ rules

HM Revenue & Customs has outlined when advisers will be considered “enablers” of tax avoidance, following government plans announced two years ago to fine those promoting avoidance schemes.

In 2016, a consultation from HMRC set out plans to clamp down on advisers in its list of “tax avoidance enablers”.

HMRC included advisers within its proposed definition of a tax avoidance “enabler” because they can benefit through fees and commissions by marketing avoidance schemes.

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.

Now HMRC has confirmed new rules for IFAs and sets out examples of when there is a breach.

It says an adviser is considered an enabler of abusive tax arrangements if they market a proposal for a tax avoidance scheme for the scheme’s promoter.

The adviser is also an enabler if they marketed the arrangements that were implemented.

Such advisers will receive a penalty in respect of the fees they received for each of the clients, says HRMC.

HRMC also listed the financial products that could make advisers an enabler including shares, loans, derivative contracts, stock lending and alternative finance schemes.

HRMC hasn’t specified, however, if a tax avoidance enabler would be an adviser who encourages clients to put money in a pension or an Isa.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Martin Tilley 1st May 2018 at 10:13 am

    “HRMC hasn’t specified, however, if a tax avoidance enabler would be an adviser who encourages clients to put money in a pension or an Isa.” I’m sorry I had to check this article was dated 1st May not 1st April…. If they don’t clarify this immediately I’m packing up financial services and going to retrain as a plumber…

  2. Charles Seymour-Cole 1st May 2018 at 10:44 am

    It is becoming positively dangerous to be a financial adviser these days.

  3. HMRC is nit fit for purpose and they need to immediately list those plans / products that are Exempt. Let’s help them
    PERSONAL PENSION CONTRIBUTIONS
    ISA’s
    LISA’s
    EIS’s
    VCT’s
    AIM ISA’s
    AIM SHARES
    BUSINESS (PROPERTY) RELIEF
    ENTREPRENEURS RELIEF
    DIVIDENDS UP TO £2,000
    PAYE UP TO £8,424 pa
    COMPANY PENSION CONTRIBUTIONS AE PENSION CONTRIBUTIONS

    and all the others that I cannot think of for the moment.

    Who exactly is responsible for issuing this guff?

  4. Anthony Smith 1st May 2018 at 2:31 pm

    Standard tax advantaged investments are designed for a purpose by Parliament to encourage saving, retirement saving and investment in industry.

    Tax avoidance schemes are entirely different where the purpose is to avoid paying tax rather than invest in a legitimate product.

  5. John Hutton-Attenborough 1st May 2018 at 4:31 pm

    Tax avoidance used to be legal.
    Tax evasion has always been illegal.
    Tax avoidance is now possible but only when it complies with law, and does not go against the spirit of what our legislators intended.
    So it is OK unless HMRC says it is not….
    Clear!

  6. John Hutton-Attenborough and others.
    Yes it is perfectly clear if you bring your thinking up to date and stop thinking of tax avoidance in 20th century definitions (I’m surprised no-one has mentioned a certain 1930s court judgement by now!)
    HMRC has redefined tax avoidance – see the following link:
    https://www.gov.uk/guidance/tax-avoidance-an-introduction
    The use of ISAs, pensions, etc. now constitute tax planning, as they use clearly laid-down tax reliefs and allowances in the manner in which Parliament intended.
    As advisers we are supposed to keep our knowledge current on issues like this after all!

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