HMRC letters warning of £1m fines hit tax firms
The first batch of avoidance experts who could be both publicly denounced by HM Revenue & Customs and forced to reveal their clients’ names has been written to by the tax department.
The advisers, who HMRC regards as potentially “high risk promoters” of aggressive avoidance schemes, are told in the letters that a failure to change their behaviour could lead to their ‘naming and shaming.’
Enabled under the new High-Risk Promoters (HRP) rules, the Revenue’s power to name them and their products – while gaining details about their customers – includes fines for such promoters of up to £1million.
In other words, parliament has given the taxman the right to identify, monitor, fine and badge avoidance promoters that taxpayers should avoid, or their details as individual clients of the promoter can be secured.
An adviser to contractors has told CUK: “This approach is likely to act as a major deterrent to scheme providers but also to scheme users or contractors, as it essentially gives HMRC power to gain details of anyone trying to avoid paying tax.”
For its part, the Revenue says the rules will tackle the “small minority” of tax advisers. Indeed, of the 20 advisories that HMRC believes are responsible for aggressive schemes, only a reported four have so far received the letters.
Like the other 16 which the rules are designed to tackle, these advisories have been described by the department as “persistently uncooperative and opaque in their dealings” with tax officers.
It is partly as a result that the £1m penalty can be imposed if the promoter fails to provide information to HMRC, which also says fines will be connected to the tax advantage gained from using the scheme(s) in question.
But even without Finance Act 2014, which introduced the rules in April, the Revenue’s anti-avoidance efforts have clearly stepped up, as it appears to be sitting on its biggest haul of unpaid taxes ever.
In particular, law firm Pinset Masons says the yield from the taxman’s clampdown on avoidance, evasion and fraud hit a record £3.65bn in 2013-14, up by almost 25 per cent on the £2.97bn in 2012-13.
David Gauke, a Treasury minister, alluded to the Revenue’s historically significant haul when he spoke recently to an HMRC stakeholder conference.
“The government has taken unprecedented steps to clampdown on the selfish minority who practise tax avoidance”, he said.
“I would strongly advise anyone thinking of signing up to a scheme which they have been told will legally reduce their tax bill to carefully consider today’s list of things a promoter may not tell you.”
The list has been published because although the HRP rules will ‘help protect taxpayers’ from the promoters of avoidance schemes, the minister also said “people need to be aware of the dangers.”
Source: contractoruk-HMRC letters warning of £1m fines hit tax firms
