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‘Cowboy advisers’ set for £1m fines under HMRC tax avoidance plans

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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”.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Derek Bradey ceo Panacea Adviser 12th August 2013 at 9:11 am

    Tax evasion is the illegal evasion of taxes by individuals, corporations and trusts.

    Tax evasion often entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liability and includes dishonest tax reporting, such as declaring less income, profits or gains than the amounts actually earned, or overstating deductions.

    Tax avoidance is the legal usage of a tax regime to one’s own advantage, to reduce the amount of tax that is payable by means that are within the law. The level of it is irrelevant.

    So, if this is about avoidance, it is legal, so why this approach. The “name and shame” net is being caste ever wider. http://bit.ly/14Gzfq5

    The solution is to simplify tax laws and make them fit for purpose and fair.

  2. Everyone has the right to arrange their affairs so that they do not pay too much tax. It could be argued that tax avoidance is to stop you paying too much tax.

    Also if you are going to use obscure schemes to try and reduce your tax bill you always have the chance the HMRC declares its bogus and have tax to pay. This has always been the case.

    Soon they will say its a moral duty of people to pay tax from their ISAs and kids must pay from their savings accounts.

  3. According to the Head banana of Deloitte’s, companies are spurning the UK over the mixed messages concerning tax.

    On the one hand the Government is blowing hard about making the UK one of the most competitive regimes and on the other you have that refugee from the Politburo – Margaret Hodge – declaring that she wants companies to pay their fair share of tax and she will determine what that fair share is. You might therefore think that it is Ms Hodge rather than the Government who is setting the law.

    And of course what Derek says is absolutely correct. It might be interesting to see a legal appeal against such cases – if they are ever brought and that this is not just the usual posturing. How can someone be sanctioned for something which isn’t illegal? What next – a fine for having sugar in your coffee?

    Why bother to set up your business in the UK when you could go to Luxembourg or Dublin? It seems we’re are harking back to the Wilson era of business destruction.

  4. The laws on this are very much out of date and very complicated.
    Most of the measures which are questionable involve moving funds for only one reason, tax avoidance.
    Huge corporations who can afford to pay are simply not paying and the system is in danger of falling into disrepute.

  5. As I’ve said many times in my office, if the government doesn’t like the way tax is legally avoided, CHANGE THE RULES!

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