HMRC targets accountants with tax avoidance fines

HM Revenue & Customs (HMRC) says it wants to address the current situation that leaves those who advise on or facilitate tax avoidance facing little risk, with only their clients open to fines.

But under the new HMRC plans, those who help their clients to exploit tax rules, including by using off-shore tax havens, could pay a fine of up to 100 per cent of the tax avoided.

The consultation document is expected to clarify rules around whether proven tax avoiders have taken reasonable care to ensure tax returns do not contain inaccuracies, making it simpler to enforce penalties when avoidance schemes are defeated. Details of the proposals have yet to be seen by tax experts, journalists or campaigners.

Jane Ellison, the financial secretary to the Treasury, will open a 12-week consultation today over new proposals of governance, which will be outlined to the industry. “People who peddle tax avoidance schemes deny the country vital tax revenue and this government is determined to make sure they pay,” Ellison said.

She added: “These tough new sanctions will make would-be enablers think twice and in turn reduce the number of schemes.”

The proposals follow on from Theresa May’s pledge last month to clamp down on corporate tax avoidance.

Firms including PricewaterhouseCoopers, KPMG, Deloitte and Ernst & Young and a select band of tax lawyers have previously been accused by MPs on the Commons public accounts committee (PAC) of helping major corporate clients to minimise tax by exploiting complex schemes.

Thousands of wealthy individuals, meanwhile, were revealed to have avoided tax on their Swiss bank accounts through offshore companies marketed by HSBC and other European lenders.

Dame Margaret Hodge, the Labour MP and former chair of the Public Accounts Committee, who highlighted the role of individuals and firms that profit from tax avoidance in a committee report last year, welcomed the consultation. “If this new measure stops this dodgy tax advice it should end much of the aggressive tax avoidance.

“Time will tell whether this measure is tough enough to deal with the long-established habits of advisers who act with lawyers, accountants or bankers and help rich individuals and large companies avoid tax,” she said.

However, the Chartered Institute of Taxation urged caution and said the real consequences on the industry could not be assessed until the details were released by the government.

John Cullinane, the institute’s tax policy director, said: “The government needs to be careful that in their efforts to wipe out avoidance schemes they don’t prevent taxpayers from getting access to honest, impartial advice on the law. Definitions will be crucial.”