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UK Tax Advisers Concerned About New HMRC Powers

by Jason Gorringe,, London

14 October 2016

Tax experts are warning that UK government proposals to penalize "enablers" of tax avoidance schemes are too widely drawn and could result in some taxpayers and businesses being unable to get expert advice on complicated and often unclear areas.

The Chartered Institute of Taxation (CIOT) is concerned that this could impact on, among other matters, investment into the UK. The CIOT said the penalties should be better targeted at those who deliberately seek to profit from tax avoidance.

HMRC is proposing a significant new penalty for those who "enable" tax avoidance and profit from doing so, and also a change to the existing penalty legislation that applies to those who use avoidance that is exposed and defeated by the tax authority.

The CIOT said it fears the proposals and definition of enablers is so widely drawn that it will catch many ordinary business services – for example company formation agents, just because some avoidance schemes rely on setting up companies.

John Cullinane, the CIOT's Tax Policy Director, said:

"The Government needs to be careful that in its effort to wipe out avoidance schemes it does not prevent taxpayers from getting access to honest, impartial advice on the law. If the Government wants to incentivize good behavior and penalize bad, as we think it should, the proposals should target the deliberate behavior of the small persistent minority who devise and market avoidance schemes. It should not interfere with the right of taxpayers to obtain full and rounded advice on complex and often unclear areas of law."

"It could be calamitous for businesses and other taxpayers if tax advisers (or their insurers) feel too anxious about the new sanctions to help them sensibly plan their tax affairs within the law and avoid these taxpayers laying themselves open to large, unintended tax bills."

TAGS: tax | investment | business | company formation | tax avoidance | law | United Kingdom | tax authority | legislation | penalties | services | Tax

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