HMRC dismisses avoidance penalty 'speculation'

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A report that tax officials are discussing the possibility of penalising tax advisers who help clients avoid tax has been dismissed by HM Revenue and Customs as "pure speculation".

The Financial Times reported today (10 June) that officials are monitoring penalty regimes used in the US and elsewhere, where "advisers involved in flagrant tax abuses can be hit with huge penalties".

Some HMRC officials would like to see stiff penalties, the paper reported, quoting one official as saying: "A question that needs to be asked is whether tax avoidance is a risk-free game in the UK."

But an HMRC spokesman told TaxZone that any changes to legislation "would be a matter for Ministers to consider".

The FT said the interest shown by HMRC in penalties for tax advisers "reflects frustration that some tax pro...

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13th Jun 2005 12:54

If you define abusive...
you can be sure that someone, somewhere in the profession will abuse the definition.

And as a matter of fact Mike knows exactly what abusive means in this context, just as a readily as he can identify an elephant.

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By tablet
13th Jun 2005 15:55

Perhaps even Richard would agree ......
that it would appear self evident that "tax avoidance" opportunities granted by statute cannot be described as "abusive"?

As it is perfectly straightforward to mitigate CGT, IHT, Corporation Tax, Income Tax and NIC's by such means - in full compliance with the law and with full disclosure to the Revenue - the attraction of, and debate about, "schemes", whether defined as abusive or not, is only of interest to those dependent upon them for fee income.

Whilst the retrospective application of some of the recent changes is unwise and unjustifiable, the "crackdown" on avoidance does not, indeed can not, affect those who have organised their affairs appropriately.

Perhaps those complaining about the "crackdown" should examine the advice given to clients - and how it can be improved?

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14th Jun 2005 17:43

As I have often said....
the use of the law as the law intended is not, and cannot be abusive. It is tax compliance, a term coming into increasingly comm,on use and which I have promoted.

But this is the point I also made on Mike Warburton's comments. Any advisor knows when they are seeking to exploit the gaps in the law - and this practice is common. That is abusive. And it is not ethically acceptable.

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By tablet
15th Jun 2005 18:00

It is surely the case that ..…
if a person is “tax compliant” – in the sense of complying with the law* and making full disclosure – they cannot be engaged in tax avoidance?

If this is accepted - and the legislation is quite clear in allowing the mitigation of CGT, IHT, Corporation Tax, Income Tax and NIC’s – then two questions are worth consideration.

Why would anyone wish to “seek to exploit the gaps in the law” when there is no need to do so?

Is it sensible or “ethically acceptable” for the government to maintain their “commitment to clamp down on tax-avoidance” whilst simultaneously specifically permitting the “avoidance” they are committed to ending?

* Compliance with what “the law intended” is also in place. I do not believe, however, that this question should arise; legislation should provide an unambiguous framework which enables the taxpayer to comply with the obligations placed upon him. It is regrettable that, perhaps because of the volume and quality of drafting of recent legislation, a need has arisen to qualify what should be clear at the outset. Legislation which does not provide certainty should be rewritten.

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