Accountants Face Tougher Penalties over Tax Avoidance

HMRC has released a consultation today announcing that accountants will face tougher penalties over advising clients of tax avoidance schemes.

Currently it is the clients who face penalties for tax avoidance, with the tax advisers facing little risk. The new guidelines could see tax advisers face penalties valued at 100% of the tax avoided. The consultation is looking at ways to prevent tax avoidance which currently costs the country £3bn a year.

The new rules mean that it will be easier to stop tax avoidance at the root. It is hoped that the new sanctions will deter would-be enablers from offering tax avoidance schemes, or suggesting how offshore havens could be used to reduce tax liabilities.

The government will not target those that are using legitimate schemes such as tax breaks or ISAs. Although accountants and lawyers will see significant change and could see them pay fines even if advice given is not illegal.

This consultation follows a government task-force being set –up to investigate the allegations of tax-dodging and money laundering in light of the Panama Papers. It is hoped that the new rules will make it harder for businesses and wealthy individuals to operate without paying correct taxes. Prime Minister, Theresa May, explained that tax avoidance will not be accepted as ‘tax is the price we pay for living in a civilised society.’

The response to this consultation from accountants is varied, with some certain that it will deter individuals from risking selling such schemes, whilst others expect many cases will not come to anything.