STEP Concerned At UK Tax Agent Law

by Robin Pilgrim, LawAndTax-News.com, London

03 May 2010

If enacted in its current form draft legislation issued by the UK government on tackling deliberate wrong doing by tax agents would have a significant impact on the availability and cost of tax advice to tax payers, the Society of Trust and Estate Practitioners (STEP) has warned.

STEP has taken issue in particular with the diverging interpretations of "deliberate wrong doing" by tax agents set out in the original HM Revenue and Customs (HMRC) consultation document and the draft legislation and cautions that tax advisers may be reluctant to act on behalf of clients in situations where tax issues are uncertain.

According to HMRC's consultation document, the definition of "wrong doing" is based on "fraud" or "dishonest evasion" and is "knowingly and intentionally wrong," an approach which STEP believes is "sensible." However, the draft legislation has a much wider definition of "wrong doing" as any act which deliberately brings about “a loss of tax” or is intended to bring about a loss of tax.

"As well as significantly widening the scope of 'deliberate wrong doing' relative to the definition offered in the original consultation document, the draft legislation appears to offer few of the protections for professional advisers that the consultation document acknowledged were appropriate," STEP warns in its response to the draft legislation.

"Without adequate safeguards tax advisers are likely to be reluctant to act for clients in cases where issues are uncertain or opaque given the threat of attracting penalties should the advisor’s interpretation not ultimately be supported," the response adds.

Furthermore, STEP suggests that widening the scope of actions which attract penalties to include actions which are “careless” as well as “deliberate” is likely to have a significant impact on the cost of professional indemnity insurance for advisers.

"This will inevitably lead to higher costs for clients," STEP predicts.

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