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New HMRC powers ‘unnecessary’

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HMRC has issued fewer than five conduct notices to promoters of tax avoidance schemes since the power was introduced in 2014, says City law firm RPC. Conduct notices can be issued to ‘high risk’ promoters, allowing HMRC to impose stringent conditions and penalties of between £5,000 and £1m for failure to comply, with no right of appeal.

Consultation has recently closed on further powers to sanction tax professionals deemed to be ‘enablers’ of tax avoidance schemes. Adam Craggs, partner and head of RPC’s tax disputes team, commented: ‘That HMRC has a large number of draconian powers which are rarely used suggests that it never actually needed them in the first place.’

Craggs added: ‘It’s also understood that no cases have been brought under the GAAR. The huge range of swingeing powers HMRC has been given in recent years may have helped its image, but to date they have been little used as an enforcement tool, and some may question whether public time and resources could have been better spent.’