The proposals
HM Revenue and Customs (HMRC) was seeking views on a range of new measures to disrupt the business models relied on by promoters of tax avoidance.
This consultation focuses on four proposals to further strengthen HMRC’s powers in relation to tax avoidance promoters:
- a new power for HMRC to seek a court order to secure a promoter’s assets to pay tax avoidance regime penalties
- additional penalties for UK entities who are involved with an offshore promoter
- winding up orders and director disqualification orders in connection with tax avoidance
- powers for HMRC to publish information about avoidance schemes that it's inquiring into and to correct false statements
These proposals build on existing anti-avoidance regimes, including the:
- disclosure of tax avoidance schemes regime (DOTAS)
- promoters of tax avoidance schemes regime (POTAS)
- penalties for enablers of defeated tax avoidance regime
Our view
We support the government’s aims and its objective to tackle promoters of mass-marketed avoidance schemes.
In order to be effective in achieving those aims, the measures should be appropriately targeted at the mischief they seek to prevent.
To that end, we propose some focusing of the threshold conditions that must be met for the measures to apply.
What this means for solicitors
We highlight the valuable role that solicitors and other responsible tax advisers play in the tax system.
It’s therefore important that the measures (which impose potentially severe sanctions in some cases) are well-targeted, in order to avoid a chilling or unfair effect on advisers.
Next steps
The consultation closed on Tuesday 1 June.
We expect the government will publish draft legislation in relation to these proposals in July 2021.