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CIOT calls for tightly targeted enabler penalties

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In its response to HMRC’s consultation on penalties for enablers of defeated tax avoidance schemes, Strengthening tax avoidance sanctions and deterrents, the CIOT supports the government’s aim of targeting the persistent minority of promoters and advisers who continue to market tax avoidance schemes and who benefit financially, but feels the proposals are too widely drawn. The CIOT’s recommendations include:

  • limiting the term ‘enabler’ to those who devise and play an active role in the promotion of schemes;
  • narrowing the definition of ‘defeated tax avoidance arrangements’ to apply only to arrangements caught by the GAAR and DOTAS rules. Targeted anti-avoidance rules and unallowable purpose rules should not be included;
  • offering a reasonable care defence to the professional adviser, a key part of which would be compliance with the guidelines on professional conduct in relation to taxation;
  • issuing a warning before a penalty is imposed; and
  • relating penalties closely to the net fees or commission received. The ‘draconian’ tax-geared penalty proposed should not be allowed to ‘topple over into retribution’.

Read the CIOT’s comments here.

Issue: 1328
Categories: News