A cross-party group of MPs is calling for an overhaul of
sanctions for advisers who promote ‘unlawful’ tax avoidance schemes. The Committee
on Anti-corruption and Responsible Tax, led by Dame Margaret Hodge, seeks to
strengthen both the common law offence of cheating the public revenue and the
penalties for enablers of defeated tax avoidance schemes provisions.
In a policy
paper, published in association with Kings College, Hodge notes: ‘We
are not trying to start a witch hunt against honest advisers that make a
mistake. We’re not simply pursuing all those that breach the codes of conduct
for a professional regulatory body. We’re looking at the very worst end of the
tax advice spectrum. The enablers of these failed tax avoidance schemes are
breaking the law, plain and simple. It is this criminality that we aim to
address.’
The report proposes using the GAAR test (where it would not be
reasonable to consider that the scheme in question was reasonable) to establish
dishonesty in relation to the offence of cheating the public revenue, meaning
HMRC would not need to prove dishonesty separately where the GAAR test has been
met. The report also suggests that the scope of the penalties for enablers
regime should be expanded to cover ‘any case of defeated tax avoidance where
the scheme was, at implementation, more likely than not to fail’ with
accompanying ‘toughened up’ penalties for the enablers.
A cross-party group of MPs is calling for an overhaul of
sanctions for advisers who promote ‘unlawful’ tax avoidance schemes. The Committee
on Anti-corruption and Responsible Tax, led by Dame Margaret Hodge, seeks to
strengthen both the common law offence of cheating the public revenue and the
penalties for enablers of defeated tax avoidance schemes provisions.
In a policy
paper, published in association with Kings College, Hodge notes: ‘We
are not trying to start a witch hunt against honest advisers that make a
mistake. We’re not simply pursuing all those that breach the codes of conduct
for a professional regulatory body. We’re looking at the very worst end of the
tax advice spectrum. The enablers of these failed tax avoidance schemes are
breaking the law, plain and simple. It is this criminality that we aim to
address.’
The report proposes using the GAAR test (where it would not be
reasonable to consider that the scheme in question was reasonable) to establish
dishonesty in relation to the offence of cheating the public revenue, meaning
HMRC would not need to prove dishonesty separately where the GAAR test has been
met. The report also suggests that the scope of the penalties for enablers
regime should be expanded to cover ‘any case of defeated tax avoidance where
the scheme was, at implementation, more likely than not to fail’ with
accompanying ‘toughened up’ penalties for the enablers.
