Accountants giving advice for Tax avoidance could receive tough penalties
Accountants or financial advisers who help customers to bend the rules to avoid paying tax could face tough new fines. the U.K. government said Wednesday.
The U.K. Treasury has opened a consultation on a new penalty that would impose a fine of up to 100% of the tax that was avoided. It hopes the fine would discourage the design, marketing, and facilitation of tax avoidance. Currently, people who avoid tax in the U.K. face significant financial costs when the tax revenue service defeats them in court, but those who advised them or facilitated the avoidance bear little risk, according to the government.
“These tough new sanctions will make would-be enablers think twice and in turn reduce the number of schemes on the market,” said Jane Ellison, the Financial Secretary to the Treasury, in a statement.
In the consultation document, which remains open until mid-October, the government said a variety of sanctions could be developed to deter people from enabling tax avoidance. It cited examples such as Australia’s system for fixed penalties for those who promote tax avoidance schemes; or it could add to existing legislation that allows a fine of between £5,000 and £50,000 ($6,500-$65,000) for individuals who are deemed to show dishonest conduct as a tax agent; or it could impose a penalty of up to 100% of the tax avoided in a scheme.
Other approaches could include a penalty related to the financial gain the tax adviser receives from the service provided to the customer. The government is also considering whether to name those financial advisers who have been penalized for helping customers avoid tax, the statement said.
The consultation, which was announced in the government’s last annual budget, will also seek to clarify rules around whether tax avoiders have taken reasonable care to ensure their tax affairs don’t contain inaccuracies, making it simpler to enforce penalties when avoidance schemes are defeated, the Treasury said.
In a statement, John Cullinane, tax policy director at the Chartered Institute of Taxation—the leading body for taxation professionals—said, “The government need 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,” he added.
Source: WSJ
