Deliberate wrongdoing by tax agents

Can I just ask what would be your take on the following examples (no need for chapter and verse just an indicatation of whether there is room for uncertainty) with respect to the draft legislation.

1. A client , little old lady. gives you the wrong information (bank interest and tax deducted) which you enter on the return ? a repayment is made. Was the action deliberate ? = Yes. Did it lead to a loss of tax ? = yes! Could a penalty have been charged ? = yes  ?? am I Guilty of wrongdoing ? seems so !

2. A potential IR35 client possibly in denial, you advise him of issues taking time explaining MICE etc etc. But cannot give an opinion (Yes or no or may be) unless he pays you (or someone else) to do a full analysis looking at all the issues. Client does not want to pay for this and takes the risk on himself, You complete the returns. deliberate ?= yes

loss of tax? = yes =possible. Penalties ? = yes ! Am I guilty of wrong doing ? = seems so !

I am sure there are many other real life examples.

Are we really expected to be our clients keepers as well, as this would be an impossible task. You can only lead a horse to water, as they say.

HMRC posts guidance on its website. Accountant reads this and advises client, entering figures on tax return for client. HMRC changes guidance, accountant not aware of change of view and so does not advice client.
Client selected for enquiry loss of tax. Client blames accountant, accountant blames HMRC. HMRC claims that its guidance is not the law. Accountant should not have relied on what HMRC said and is therefore culpable.

Client prepares accounts to trial balance. Accountant takes figures, reviews accounts, unable to vouch 100% as impractical. Prepares company tax return. HMRC enquiries reveal that client made bookkeeping errors which led to a loss of tax. Client blames accountant for not checking. Accountant argues unable to check 100%. HMRC acts are arbitrator and decides to apply penalties to both parties.

Meanwhile, the Tax Tribunal is full to bursting point and a new generation tax advisers is operating out of China, every minute.

I will ask that the legislation is clearer, as I read it as, anyone who deliberately completes a claim that leads to a loss of tax would be a wrongdoer if a penaltly could have been charged.

I think some of the sentiment/meaning in the consultation document (a lot of which, I agree with) has been lost in the draft legislation.

Thanks again I will get on with drafting my response.

I am worried about the definition of a "tax loss".

(4) "Loss of tax" means loss of revenue from tax, and includes a loss involving
a relief, deduction, repayment or credit of any kind.

It does not say a loss of tax rightfully owed, and so would seem to include a case where an advisor correctly advises that a client is paying too much tax, or can legally arrange his affairs to pay less, e.g. advising a LTD co. consultant that he can (as confirmed by Jones v. Garnett) gift a share in the company to his wife and reduce their joint tax liability.

This is modified by:

(6) Sub-paragraph (1)(a) applies in particular to -
(a) acts done on behalf of clients in respect of which a penalty could have
been imposed on the client under an enactment relating to tax, had
the client done the act, and
(b) advising or otherwise assisting clients to do any such act.

but I am worried ab out the words "in particular", which do not mean "only".

Is this a further attempt to blur the distinction between evasion, avoidance and tax planning? HMRC would like to make tax planning illegal, and this legislation appears to do just that!

Also, am I right in thinking that the definition of "tax agent" would include an organisation like the PCG advising its members how to keep contracts out of IR35?

(3) Assistance with a client's tax affairs includes assistance with any document
that is likely to be relied on by HMRC to determine the client's tax position.

And of course it begins with the standard "Henry VIII" clause, without which no new peice of legislation would appear properly dressed. Does no one even worry about this any more?

"Deliberate" is the key.  But it MUST be for HMRC to prove "beyond reasonable doubt". Otherwise we are all out of business.

How often have we looked at a figure of, say, 927 on the client's invoices, and entered it as 297 ?

So we have understated the clients income by 630 with a loss of tax at 40% of 252. 

It's an accident, an error, not deliberate - or, maybe I did it deliberately to lower the clients liability?  

How are HMRC going to PROVE it was deliberate, or, will it be ASSUMED to be deliberate? In which case, given the penalties involved, we will soon be spending more time in court that in our offices.  

HMRC have enough power to prosecute bent Accountants. Less face it all the really naughty people have an arsenal of lawyers to protect them.

We all seem to realise that HMRC are going to penalise any form of tax avoidance, apart from, of course, whatever it deems not to be tax avoidance. Perhaps if we suggest HMRC produce a list of what allowances etc. are permissable under their new rules we might not get any wrong doers. Hang on if they did that they wouldn't get any penalties!!!!!!!!!!!!!!!!

Why are we saying "oh this condoc is a bit vague" instead of "on yer bike this condoc amounts to illegalising all forms of tax avoidance that HMRC don't like".

HMRC are saying to us "we are perfect and know what is right and wrong you Accountants will do what we say or else".

I state again HMRC have enough power to legally do what they need to do. It appears they want to be above the law.

I always remember what a senior Inspector of Taxes said to me many years ago when I told him he was wrong and our client would take the matter to court if pushed. 

He said "we're the Inland Revenue, you can't sue us". 

Many years and many succesful cases later I'd love to meet him - just for the pleasure of sticking two fingers up to him.

Even now, his pompous attitude still exists in HMRC and that is the problem. Pompous self opinionated civil serpants who think they are above the law and can do whatever they please.