Experts fight back against government's tax avoidance proposals

 
Hayley Kirton
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Government will need to be careful with the wording it chooses to introduce its proposals, the experts warned (Source: Getty)

Accountants and lawyers have today pushed back against new tax avoidance proposals from the Treasury, arguing they risk punishing people for merely trying to do right by their clients.

Earlier today, the Treasury laid out plans which would penalise advisers for offering information on how to sidestep tax, while a consultation run by HM Revenue & Customs (HMRC) is currently open for response.

"These tough new sanctions will make would-be enablers think twice and in turn reduce the number of schemes on the market," said Jane Ellison, financial secretary to the Treasury.

However, those who could potentially be affected by the new rules were quick to point out the devil would be in the detail and government would need to tread carefully not to catch those who were not doing anything untoward.

Read more: Will plans to fine firms who advise on aggressive tax avoidance backfire?

"We are concerned about a scenario where a taxpayer goes to their tax adviser for advice on risks attached to participating in a scheme, receives appropriate advice setting out these risks and the likelihood of the scheme being defeated, but decides to join the scheme despite this," said John Cullinane, tax policy director of the Chartered Institute of Taxation. "It would be extremely harsh to penalise a tax adviser in this scenario where all the tax adviser has done is advise the taxpayer on the law as it stands."

Bill Dodwell, head of tax policy at Deloitte, added: "We will need to look carefully at what might be in scope, as well as at the proportionality of any possible penalty. Taxpayers are entitled to advice and it would not be right to deter responsible advisers by introducing unclear and wide-ranging penalties."

Meanwhile, Tom Wesel, partner at boutique tax consultancy firm Milestone International, slammed to current plans as "one-sided, ludicrously draconian, and [needing] to be revised".

Read more: UK offshore companies side-step new transparency rules

Fiona Fernie, partner and head of tax investigations at Pinsent Masons, added that the inclusion of a retrospective element, whereby people could be punished for advice they had given in the past, did not sit well with the government's stated intentions.

"Given the emphasis placed on deterring future avoidance in the proposal, and influencing taxpayer behaviour going forward, such an approach would make little sense," Fernie said. "A line in the sand should be drawn and clear timescales set out."

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