Dishonest tax agents: Trouble ahead
From 1 April dishonest tax agents are liable to civil sanctions. HMRC has yet to write their guidance but John Flood explains the provisions and their scope.
Civil penalties for persons who act dishonestly with a view to bringing about a tax loss while acting as a tax agent will be brought into effect for conduct occurring after 1 April (schedule 38 FA 2012 and 2013 S.I. No.279). Both direct and indirect taxes are covered. Penalties from a £5,000 minimum to £50,000 maximum can be applied.
Misconduct must be by an individual and dishonest, incompetence or gross negligence is not enough. Dishonesty will usually be evidenced by showing the creation or presentation of some kind of false or misleading picture. The help given must be with a view to bringing about a loss of tax revenue whether a loss actually occurs and should involve assistance in the tax affairs of a client.
Both advisory and representational acts are covered. Indirect assistance is also caught if the agent knows or believes that it will, or is likely to be used, in connection with a client’s tax affairs.