A very short eight-week consultation is now underway on proposals which are intended to impose sanctions on accountants and advisers of tax schemes which are defeated by HMRC in the Courts. Proposals to change the way the existing penalty regime works for those whose tax returns are found to be inaccurate as a result of using tax avoidance arrangements are also included.
The Government through HMRC is very clearly seeking to influence the behaviour of promoters and other intermediaries, including agents, Independent Financial Advisers (IFAs) and others in the tax avoidance supply chain who they describe as ‘enablers’.
The consultation makes clear that an ‘enabler’ of tax avoidance includes anyone in the supply chain who benefits from an end user implementing tax avoidance arrangements and without whom the arrangements as designed could not be implemented. The consultation document provides a number of case studies to illustrate who would be caught by the proposed new arrangements.
Fines for advisers who promote tax schemes could be very significant and recent press reports suggest these could be as high as 100% of the value of the unpaid tax. The proposals hinge on a more rigorous interpretation of what the government and HMRC consider to be beyond what is acceptable tax planning and falls into aggressive or overt tax avoidance schemes.
The Chancellor of the Exchequer will set out the timing for the introduction of a new penalty regime as part of the March 2017 Budget with a view to introducing the rules into legislation an upcoming Finance Bill. Whilst the timing isn’t confirmed it looks likely, based on the consultation, that the penalty approach could take effect over the course of the 2017-18 tax year.
Whilst the ‘enablers’ of tax avoidance schemes are a relatively new target for HMRC don’t think for one minute they are ignoring the businesses and individuals who have used tax schemes. With the introduction of the controversial APN (Accelerated Payment Notice) regime HMRC can already demand tax it believes it is owed before any dispute over tax arrangements is adjudicated in the Courts.
Clearly HMRC is keen to encourage businesses and individuals to seek settlement of any disputed tax arrangements before they reach litigation stage. The Bedrock team is experienced in negotiating settlements and time to pay arrangements for businesses who choose to resolve any disputed tax issues. You can find out more here or give us a call to discuss how we can help you avoid any additional penalties.
The deadline for comments on the HMRC consultation is 12 October. Details can be found at Strengthening Tax Avoidance Sanctions and Deterrents: A discussion document
