The Law Society has responded to HMRC’s consultation on a range of new measures to disrupt the business models relied on by promoters of tax avoidance. The Society supports the government’s aims to tackle promoters of mass-marketed avoidance schemes, but proposes that:
any measures should be ‘appropriately targeted at the mischief they seek to prevent’;
threshold conditions for the application of the proposals should be strengthened to ensure they do not catch legitimate tax advisers or restrict the ability of taxpayers to obtain bespoke advice on their tax affairs;
strengthened sanctions should apply only where any ‘reasonable adviser’ would consider the arrangements abusive and where the GAAR would apply, or where there are material breaches of the POTAS rules; and
HMRC’s exercise of powers under any new provisions should be effectively supervised.
The consultation, which ran until 1 June 2021, focused on the following four areas to further strengthen HMRC’s powers in relation to promoters:
new power for HMRC to seek a court order to secure a promoter’s assets to pay tax avoidance regime penalties, where the promoter had moved or hidden those assets in order to avoid paying penalties;
additional penalties for UK entities involved with offshore promoters;
winding-up orders targeting companies involved in promoting or enabling tax avoidance, and the power to disqualify directors ‘at the earliest point possible’; and
powers for HMRC to publicise avoidance schemes under inquiry to help taxpayers avoid or exit such schemes.
The consultation on clamping down on promoters of tax avoidance’ also included a useful list of the principal anti-avoidance legislation (Annex A) together with an overview of promoter and enabler penalties including the changes in Finance Bill 2021 (Annex B).
The Law Society has responded to HMRC’s consultation on a range of new measures to disrupt the business models relied on by promoters of tax avoidance. The Society supports the government’s aims to tackle promoters of mass-marketed avoidance schemes, but proposes that:
any measures should be ‘appropriately targeted at the mischief they seek to prevent’;
threshold conditions for the application of the proposals should be strengthened to ensure they do not catch legitimate tax advisers or restrict the ability of taxpayers to obtain bespoke advice on their tax affairs;
strengthened sanctions should apply only where any ‘reasonable adviser’ would consider the arrangements abusive and where the GAAR would apply, or where there are material breaches of the POTAS rules; and
HMRC’s exercise of powers under any new provisions should be effectively supervised.
The consultation, which ran until 1 June 2021, focused on the following four areas to further strengthen HMRC’s powers in relation to promoters:
new power for HMRC to seek a court order to secure a promoter’s assets to pay tax avoidance regime penalties, where the promoter had moved or hidden those assets in order to avoid paying penalties;
additional penalties for UK entities involved with offshore promoters;
winding-up orders targeting companies involved in promoting or enabling tax avoidance, and the power to disqualify directors ‘at the earliest point possible’; and
powers for HMRC to publicise avoidance schemes under inquiry to help taxpayers avoid or exit such schemes.
The consultation on clamping down on promoters of tax avoidance’ also included a useful list of the principal anti-avoidance legislation (Annex A) together with an overview of promoter and enabler penalties including the changes in Finance Bill 2021 (Annex B).
