Share this content

Chancellor gets tough on avoidance

23rd Nov 2016
Share this content
red card penalty
iStock_mikkelwilliam_red card

Philip Hammond has reinforced an incoming penalty for those who enable the use of a tax avoidance scheme that HMRC later challenges and defeats.

As revealed in the Autumn Statement and originally signalled back at Budget 2016, legislation will be introduced to penalise not just those who use defeated tax avoidance measures, but those who enable it, including professional advisers.

According to the report this new regime will reflect “an extensive consultation and input from stakeholders and details will be published in draft legislation shortly.” However it remains to be seen what the new regime looks like and we are yet to see HMRC’s follow-up to the responses submitted to its August consultation.

The government will also remove the defence of having relied on non-independent advice as taking ‘reasonable care’ when considering penalties for any person or business that uses such arrangements.

John Cassidy, tax investigations partner at Crowe Clark Whitehill, said this was a worrying aspect for qualified professionals: “A scheme’s salesmen are often tax experts themselves and provide presentations, explanations and documents that are convincing and supported by opinions from expert tax counsel. It may not be obvious to the taxpayer that he is at risk of penalties if he doesn’t consult another tax expert.

“It is also difficult to define where the boundary will be. To outline a common example, a person is introduced to an apparent expert in tax planning by his normal accountant who earns a commission for the introduction but has also gone the extra mile and obtained his own counsel’s opinion before recommending the scheme. Is the taxpayer still open to a penalty if he fails to seek yet another tax expert for a third opinion? SuremaiJ dntroduced to"et another tax expert for a thit

- height="1? Sect for qur a third themrnal advisers. S35 - A History" data-on"me. Is the taxpayer still openOinion before recommcasts" class="primary-nav__link p="britener('DOMContaltidattitle">Shlll, snmmcascr>- height="1? Sect for qur a third themrnal advisers. < mollotent"> Sll, snmmcascr>- hei> hoz,a,h Sll, ll, snmmcascrb,h Slltroductihp>As rch S35 - A History" data-on"mn"h="httpobt"yPjn rece='till openOinion before recommcasts" class="primary-nav__link p="britener('DOMContaltidattitle_link p="britener('|"yPjn-pronono 7vBvent) ,hnt? Srotcak1br('|"yPref="/enmmcascrb,h Slltroductie\:script>? Srotcak1br('|"yPref=es/styles/iml’s opinioenalGnmmcas /pKforp p="britener('|"yPjn-pronont) ,hnt? Srotcak1bro"yPjn-pronont) ro":ener('|"yPjn-pronont) ,hnt? S