Introducing a new criminal offence for continuing to promote an avoidance scheme which is subject to a stop notice raises a number of important questions, says the CIOT. Responding to HMRC’s consultation Tougher consequences for promoters of tax avoidance, the institute questions the proposal to introduce a strict-liability offence of continuing to promote tax avoidance schemes after having been issued with a stop notice. By its nature, such an offence would be committed by the promoter’s actions alone without any consideration of guilty intent (mens rea). HMRC is the body which decides whether or not to issue a stop notice, and this could in effect give HMRC officials the power to decide what is and what is not a criminal act, potentially impacting on the rule of law.
The CIOT notes that this places a very high level of reliance on HMRC’s internal governance structures. For example, although unlikely, it is possible that an officer could issue a stop notice incorrectly, due to time pressure, incompetence or unconscious bias.
As the CIOT summarises: ‘We are strongly of the view that there needs to be a higher level of scrutiny before a stop notice that carries with it the risk of criminal charges is issued’. Simply relying on HMRC’s goodwill is not a sufficient safeguard.
Given how the tax avoidance market has evolved since the promoters of tax avoidance rules were introduced, a wider review of the legislation should be carried out soon, to assess whether the rules are still fit for purpose, says the institute.
Introducing a new criminal offence for continuing to promote an avoidance scheme which is subject to a stop notice raises a number of important questions, says the CIOT. Responding to HMRC’s consultation Tougher consequences for promoters of tax avoidance, the institute questions the proposal to introduce a strict-liability offence of continuing to promote tax avoidance schemes after having been issued with a stop notice. By its nature, such an offence would be committed by the promoter’s actions alone without any consideration of guilty intent (mens rea). HMRC is the body which decides whether or not to issue a stop notice, and this could in effect give HMRC officials the power to decide what is and what is not a criminal act, potentially impacting on the rule of law.
The CIOT notes that this places a very high level of reliance on HMRC’s internal governance structures. For example, although unlikely, it is possible that an officer could issue a stop notice incorrectly, due to time pressure, incompetence or unconscious bias.
As the CIOT summarises: ‘We are strongly of the view that there needs to be a higher level of scrutiny before a stop notice that carries with it the risk of criminal charges is issued’. Simply relying on HMRC’s goodwill is not a sufficient safeguard.
Given how the tax avoidance market has evolved since the promoters of tax avoidance rules were introduced, a wider review of the legislation should be carried out soon, to assess whether the rules are still fit for purpose, says the institute.
