Advisers and accountants could pay fines in excess of earned fees in new proposed crackdown on tax avoidance
Financial advisers and accountants who help enable tax avoidance are to be targeted and heavily fined, under new proposals.
Under the Treasury proposals, those advisers and accountants who help tax avoidance, or even devise the schemes, could be fined up to 100 per cent of the tax avoided.
Tax avoidance is legal and is where you take steps to minimise your tax bill, while tax evasion is illegal.
The moves were heralded by George Osborne, been heavily urged by Labour, and have now been taken up by Prime Minister Theresa May.
The fine, under the suggested new rules, will include tax avoided via off-shore havens. The Treasury said it would "root out" tax avoidance, making it harder for businesses and individuals to avoid paying the correct amount of tax.
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Under the current system accountants and advisers face little risk. Individuals are normally targeted, not the professionals who advise and promote the schemes.
The fine of up to 100 per cent would be more than the fee earned by the advisers.
"These tough new sanctions will make would-be enablers think twice and in turn reduce the number of schemes on the market," said financial secretary to the Treasury Jane Ellison.
The rules come after a task force was set up to investigate tax-dodging in the wake of the Panama Papers, which gave an insight into the scale of high-profile individuals and companies using tax havens to hide their wealth.
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Frank Haskew, head of tax faculty at the Institute of Chartered Accountants in England and Wales, encouraged the moves in theory, but questioned them in practice.
He said: “The public is rightly concerned about tax avoidance, and we support efforts to tackle it. There have been a number of initiatives to tackle tax avoidance and significant progress has already been made. The government has already introduced a number of measures to tackle the behaviours of a small minority engaged in promoting aggressive tax avoidance schemes.
"However, the government needs to ensure any new rules are properly targeted only to tackle those advisers that promote aggressive tax schemes rather than the vast majority of reputable advisers engaged in ordinary tax planning. Anecdotal evidence suggests that many of these promoters are based offshore and operate outside of any regulatory framework, so actually hitting them with a penalty may prove more difficult in practice."