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.