The second Finance Bill 2017 received royal assent on 16 November 2017, becoming the Finance (No 2) Act 2017. The House of Lords stages all took place on 15 November.
Among the measures coming into effect from the date of royal assent are new penalties for enablers of defeated tax avoidance; and for failing to correct offshore tax non-compliance.
The enablers’ penalty is a fixed 100% fee-based penalty on anyone who has profited from enabling the use of tax avoidance arrangements that HMRC later defeats either in a court or tribunal. HMRC has indicated in guidance that advisers who act wholly within the spirit of the guidelines on ‘Professional conduct in relation to taxation’ should not find themselves affected by the new penalty.
Commenting on the enablers’ penalty, Chris Davidson, chair of the CIOT’s management of taxes sub-committee, called HMRC’s guidance ‘reassuring’, but added: ‘It is nonetheless advisable that tax practitioners familiarise themselves with the scope of the penalty before providing advice to a client on a tax arrangement that is potentially within the GAAR, including one designed by others, in order to minimise any risk of exposing themselves to an enablers’ penalty.’
The failure to correct penalty, of between 100% and 200% of the offshore potential lost revenue, will apply where taxpayers have not corrected errors or omissions relating to offshore matters arising before 6 April 2017 by 30 September 2018. The legislation limits the scope for a reasonable excuse defence, which is restricted to taxpayers who have taken ‘disqualified advice’.
Commenting on the failure to correct penalty, Davidson said: ‘This measure requires taxpayers to correct their tax affairs without specific prompting from HMRC, so there needs to be effective communication of the proposals to ensure affected taxpayers are aware of them.
‘In our view, the “disqualified advice” restriction risks unfairly penalising taxpayers who took proper advice in the past from reputable advisers and who consider that they have acted responsibly by taking advice on their tax affairs.
‘It is not apparent how they will be expected to identify that advice they have received in the past, or indeed are seeking now, would be classified as “disqualified advice”.’
The second Finance Bill 2017 received royal assent on 16 November 2017, becoming the Finance (No 2) Act 2017. The House of Lords stages all took place on 15 November.
Among the measures coming into effect from the date of royal assent are new penalties for enablers of defeated tax avoidance; and for failing to correct offshore tax non-compliance.
The enablers’ penalty is a fixed 100% fee-based penalty on anyone who has profited from enabling the use of tax avoidance arrangements that HMRC later defeats either in a court or tribunal. HMRC has indicated in guidance that advisers who act wholly within the spirit of the guidelines on ‘Professional conduct in relation to taxation’ should not find themselves affected by the new penalty.
Commenting on the enablers’ penalty, Chris Davidson, chair of the CIOT’s management of taxes sub-committee, called HMRC’s guidance ‘reassuring’, but added: ‘It is nonetheless advisable that tax practitioners familiarise themselves with the scope of the penalty before providing advice to a client on a tax arrangement that is potentially within the GAAR, including one designed by others, in order to minimise any risk of exposing themselves to an enablers’ penalty.’
The failure to correct penalty, of between 100% and 200% of the offshore potential lost revenue, will apply where taxpayers have not corrected errors or omissions relating to offshore matters arising before 6 April 2017 by 30 September 2018. The legislation limits the scope for a reasonable excuse defence, which is restricted to taxpayers who have taken ‘disqualified advice’.
Commenting on the failure to correct penalty, Davidson said: ‘This measure requires taxpayers to correct their tax affairs without specific prompting from HMRC, so there needs to be effective communication of the proposals to ensure affected taxpayers are aware of them.
‘In our view, the “disqualified advice” restriction risks unfairly penalising taxpayers who took proper advice in the past from reputable advisers and who consider that they have acted responsibly by taking advice on their tax affairs.
‘It is not apparent how they will be expected to identify that advice they have received in the past, or indeed are seeking now, would be classified as “disqualified advice”.’
