Avoidance schemes - CIOT welcomes robust approach on promoters

Commenting on the publication today of draft legislation and a consultation document on tackling promoters and enablers of tax avoidance schemes, CIOT Tax Policy Director John Cullinane said:

“The Government are right to be taking a robust approach to those who continue to devise, promote or sell tax avoidance schemes. There should be no place for such people and their schemes in the tax services market.

“As the Government’s consultation document states: ‘Promoters of tax avoidance schemes are rarely members of professional bodies.’ Indeed many – perhaps a majority – are not tax advisers or tax agents at all but rather operate in boutique firms focused mostly or entirely around such avoidance schemes.

“There is anecdotal evidence of promoters of tax avoidance enticing taxpayers to use their schemes on false pretences as to the risks and likely consequences of entering the scheme, and then failing to support the taxpayers (except in return for significant further fees) when HMRC investigate and perhaps litigate. The possible interventions necessary to address this issue need to apply whether the promoters in question are giving, or purporting to give, advice or not.

“The draft legislation published today changes rules on Disclosure of Tax Avoidance Schemes (DOTAS) and the Enablers Penalty Regime to require information to be provided at an earlier stage. While we will be looking at the detail to check that the changes will work practically this does seem a sensible element in HMRC’s strategy.”

The Government have also launched a call for evidence on tackling disguised remuneration tax avoidance. CIOT President, Glyn Fullelove, commented:

“Like the promoters and enablers consultation this call for evidence comes out of the Morse review of the loan charge.

“Despite the persistent efforts of successive governments to stamp it out, disguised remuneration (DR) continues to be a stubborn and insidious form of tax avoidance. Schemes targeting agency workers using umbrella companies continue to operate. The workers themselves may have no idea they are avoiding tax until contacted by HMRC, by which time the umbrella company may have disappeared, leaving the agency worker to pick up the bill.

“This is a very broad call for evidence – essentially a plea from the Government for ideas on how the remaining DR schemes and other avoidance can be stopped. We look forward to engaging with HMRC and providing constructive input into how such schemes can be stopped at source”.

Notes:

Details of the Government’s announcements can be found via these links:

New proposals for tackling promoters and enablers of tax avoidance schemes

Call for evidence: tackling disguised remuneration tax avoidance