As the Spring Budget looms, new tax avoidance legislation has sent shivers across the accountancy and financial services industry, writes Stephen Outhwaite, tax dispute consultant at Pierce Chartered Accountants.
To clamp down on the so-called tax avoidance industry, the government is currently introducing the following changes:
- Making further attempts to tackle the disguised remuneration tax avoidance schemes based on transactions with no commercial purpose, manufactured paperwork, expenses for attending non-existent meetings and other ‘creative’ means.
- Imposing a 100% fee-based financial penalty on ‘enablers’ of tax avoidance schemes, targeting all professionals in the supply chain including accountants, financial planners and lawyers.
- Removing the defence against penalties of ‘reasonable care’ for those who rely upon ‘non-independent’ advice provided by the enablers of defeated tax avoidance schemes.
- Introducing a new legal requirement to correct a past failure to pay UK tax on offshore interests within a deadline.
Many professional practices are feeling nervous about the changes with the principle concern being where the courts will draw the line between legitimate tax planning and tax avoidance.
Practitioners could be exposed to financial penalties for their full fee in relation to advice on a tax arrangement which is subsequently defeated by HM Revenue & Customs (HMRC), as well as the risk of being ‘named and shamed’ in the press. Revised professional standard guidelines issued by various accountancy representative bodies advise extreme caution in these matters.
At Pierce, we have the specialist expertise to offer support and guidance for colleagues in professional services who may be impacted by these new measures, or have clients who are effected.