HMRC to clamp down on tax avoidance scheme promoters

The government is considering giving HMRC new powers to ‘name and shame’ high-risk promoters of aggressive tax avoidance schemes and the power to issue fines and penalties for up to £1m say Harris & Co chartered accountants Northampton as part of their tax services as specialist small business accountants.

In a six-week consultation released today, HMRC is seeking feedback on proposals to tackle the behaviour of high-risk promoters of avoidance schemes by making it significantly harder for them to market avoidance and the planned introduction of penalties for users of failed avoidance schemes.

Among the proposals for tackling the behaviour of high-risk promoters is to ‘name and shame’ them – a power that HMRC currently does not have. The government also proposes to give HMRC greater powers to force those who persist in promoting avoidance to be transparent with HMRC about what they are doing.

In addition, the consultation seeks views on a proposed extension to the prescribed information to be provided under the Disclosure of Tax Avoidance Schemes (DOTAS) rules.

The plan is to introduce penalties for failure to comply with the new regime and higher standards for reasonable excuse and reasonable care that will apply to attempts to sidestep it.

Failure to comply with the proposed information powers could see initial penalties of up to £1m being imposed, with a continuing failure penalty of £10,000 for each day that the failure continues.

The consultation also suggests introducing powers so that taxpayers who have used avoidance schemes which are defeated in another party’s litigation have to amend their tax returns accordingly or face a tax-geared penalty if they are unable to justify not making an amendment.

Treasury secretary David Gauke said: ‘The vast majority of tax advisers are not high risk and have moved away from selling aggressive avoidance schemes but; there is still a minority that persists in promoting these schemes. We want to make life as difficult as we can for them and demonstrate that there is no tolerance for aggressive tax avoidance.’

The closing date for the consultation is 4 October 2013.

More details on the consultation are available from Gov.uk