Prosecute advisers who help tax avoiders, says MP

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Accountants who promote aggressive tax avoidance schemes should face criminal prosecution, according to a Conservative MP.

Charlie Elphicke, the MP for Dover and a former tax lawyer, told the Times newspaper that he has tabled a series of amendments to the Finance Bill that would make it illegal to help clients to invest in schemes designed to avoid tax.

Elphicke said he wanted to start a discussion about the morality of tax avoidance, the Times reported.

His comments reflect growing political support to take tougher action against tax avoidance, which unlike tax evasion, is legal but increasingly restricted by new laws.

In the March Budget, Chancellor George Osborne said taxpayers will have to pay upfront if their tax avoidance scheme has been registered under the Disclosure of Tax Avoidance Schemes (DOTAS), which was introduced in 2004.

Individuals and businesses using avoidance schemes that fall under the General Anti-Abuse Rule (GAAR), introduced in July 2013, will also have to pay their tax upfront.

Nick Huber
Freelance journalist
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23rd Jun 2014 11:22

So it's going to be illegal...

... to help people to do something that's perfectly legal. Sounds like something out of a book by Samuel Butler.

The creation of new problems is always a much better solution than fixing the existing problems.

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23rd Jun 2014 13:25

tax avoiders lock em up
...SOUNDS LIKE 1984 SQUARED TO ME ...

I AM AMAZED THIS CONES FROM A PERSON WITH A PUTATIVE KNOWLEDGE OF TAX . PROBABLY WHY HE SWITCHED TO BEING AN MP WASN T A VERY GOOD ACCOUNTANT !!

CURRENTLY REPEAT CURRENTLY TAX AVOIDANCE REPEAT AVOIDANCE IN ALL ITS FORMS IS LEGAL UNTIL HMRC AND POSSIBLY FIRST AND SUBSEQUENT TRIBUNALS RULE IT INADMISSABLE . RIGHT TO APPEAL UP TO SUPREME COURT IF GRANTED .

IF HE DOES NT LIKE THE LAW ..CHANGE IT ... DIN T TRY TO CIRCUMVENT IT !!!!

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23rd Jun 2014 11:40

You couldn't make it up!

An ex-tax lawyer and MP wanting to start a discussion on the morality of tax avoidance.

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24th Jun 2014 11:42

Leopards and spots

Actually, there are a lot of accountants and lawyers who have very negative views about tax avoidance precisely because of their working experience .  I have negative views myself although my objections are largely practical (or perhaps I'm flattering myself and they're only pragmatic). I suspect like most accountants, I'm more comfortable talking about the practical issues of risk and reputation management with clients than the moral and ethical ones but that doesn't mean that the difficult questions should be ignored.

I suspect that as we get closer to the General Election we'll see a lot more debate about tax avoidance .

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23rd Jun 2014 12:10

and presumably he

is still claiming his £400 food monthly 'allowance', to ensure he doesn't starve whilst working 'away' from home.  No receipts/invoices or indeed proof or requirement to attend parliament required....tip of the 'MPs only allowances free for all' iceberg.....one rule for one....  

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23rd Jun 2014 12:50

Is all tax 'avoidance' legal?

I don't think so, otherwise HMRC would be unable to attack them. Artificial schemes cross the line, and this is the reason for the uproar. 

If pretending to have a second hand car business is 'legal', then where is the line to be drawn? The result of court action against many of these schemes seemed to say it is ok to be dishonest if you are recommended to do so by a professional. In which case, I think it is perfectly reasonable to go after the 'professional'.

It's the same old story though ... all new legislation brought in to deal with the bad apples has a derogatory effect on the good apples, too.

 

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23rd Jun 2014 17:10

I doubt

He would propose this if it were possible to make it retrospective, as then he could be hoisted by his own petard potentially.

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24th Jun 2014 11:17

@Shirley

By definition tax avoidance is legal otherwise it's tax evasion.

However what has been happening is that an artificial element eg "second hand car business" has crept into the equation. My view is that anything artificial is tax evasion and all responsible should be held to account.

I always look at "putting the wife on the books" scenario. If she does something gets and receives inflated payment, that is tax avoidance - perfectly legal (morally not so right). Wife doesn't do anything, doesn't receive money but is put on the books, that is tax evasion. So it's presentation. No doubt these schemers got complacent, now it's all come on top.

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24th Jun 2014 11:46

Thanks John

I agree.

It seems wrong that if someone who is unrepresented claimed to be a used car salesman (when they are not) would be in serious trouble for tax evasion, whereas someone with a professional adviser gets off scot free for doing the exact same thing.

Professional advisers who advise clients to follow dishonest practices should be punished, otherwise there is no deterrent is there? As things stand, the client pays the tax that should have been paid (no hardship there), and the advisor keeps his fees and thinks up the next scam to line his pockets, funded by the taxpayer. There is no real deterrent.

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25th Jun 2014 09:40

An easier way...

It seems to me that the easy way to deal with this would be to make any individual involved in the promotion of a failed avoidance scheme jointly and severally liable for any tax and legal costs.  Further their actions should automatically be deemed to be negligent.

The problem we have at the moment is that the snake oil salesman gets away scot free.

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19th Mar 2015 14:09

The law is binary

In other words, you win some, you lose some. A failed avoidance scheme MAY be evasion (charity share gifts) but may be a pefectly legit film relief scheme which fails on a compliance technicality and I can tell you that HMRC DO rake over the coals to see if an innocent but crucial mistake has been made.

In many cases it may be too late to cover failed relief and so penalties and interest apply. In this same budget film and TV relief has been extended. Whatever shape that incentive is it is a fact that investors review the cost/benefits and if participation is more expensive (upfront tax paid and relief later) the incentive will either work or it won't. Tax "saved" does not neccessarily equate to tax "received".

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25th Jun 2014 09:48

Insufficient punishment
The problem to me seems that there is insufficient penalty for those involved in avoidance schemes. IF (big if!) they get challenged then they pay tax, interest and whatever fees are involved in setting up the scheme and the litigation. They rarely seem to be charged a penalty

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25th Jun 2014 21:52

Where do you draw the line?

Recommending someone to use an ISA is avoiding the tax that may be due if you didn't.  I think we can all see the gulf between these Icebreaker/second hand car schemes and legitimate tax planning and I agree that the former should be drummed out of business.  But ultimately, a lot of these schemes are promoted because of poor legislation, which our holy friend the MP has more control of than the average advisor.  Heal thyself first!

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26th Jun 2014 09:19

If you have

the mindset then it really is no different to stealing, robbing, etc. The object of the exercise is to make as much money as quickly as possible to support the lifestyle you want.  Most of us are unable to do that because we are of a different mindset. Then of course you have the cleverdicky people who think they can have both. Suddenly they're not so cleverdicky.

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