An HMRC consultation around measures to rein in “high risk” promoters of tax avoidance scheme would a;sp require users of tax avoidance schemes “to amend their tax returns accordingly” if the arragements are defeated in court.
Under the new proposal, taxpayers who do not satisfy HMRC that they had a reasonable basis for not amending their returns could face a tax-geared penalty.
The paper targeting promoters has been on the cards since the March Budget, when chancellor George Osborne promised consultation around a package of information powers and penalties and to curb high-risk promoters of tax avoidance schemes.
While few would dispute the need to curb abusive schemes, the proposed sanctions set out in HMRC’s Raising the stakes on tax avoidance consultation document contain a few potential controversies - including a higher threshold for reasonable excuse and reasonable care for both advisers and taxpayers in such high risk cases.
The consultation period lasts until early October with the government planning to bring forward legislation for the Finance Bill 2014 - possibly in the shape of draft clauses by early December.
The main points cover:
- High risk promoters
- Failed tax scheme penalties
- Tougher criteria for reasonable excuse and reasonable care
- "Locking the door after the horse has bolted"