HMRC proposes hefty fines for accountants facilitating tax avoidance

The UK Treasury is cracking down on tax avoidance by proposing tougher new fines for accountants or advisers who help customers bend the law to avoid paying tax.

The Treasury opened a consultation on a new penalty that would fine up to 100% of the tax that was avoided to anyone professionally involved in a scheme.


HMRC said in its consultation document:

“While the vast majority of taxpayers in the UK comply in full with their tax obligations, a minority attempt to pay less than their fair share by using tax avoidance arrangements.

“Most of these arrangements do not deliver the tax results they promise. They are developed, marketed and facilitated by a persistent minority of promoters, advisers and other intermediaries. Collectively, these persons are referred to in this consultation as enablers of tax avoidance.”

The proposals raise the stakes for those who design, market, or facilitate the use of avoidance by introducing sanctions on them when the avoidance they have enabled is defeated.

According to HMRC, an enabler also includes “anyone in the supply chain who benefits from an end user implementing tax avoidance arrangements and without whom the arrangements as designed could not be implemented.”

HMRC said penalties could be based on the financial or economic gain of the enabler and/or the services they have provided to any user, in addition to the option of naming enablers who are subject to this new penalty.

Richard Murphy, a chartered accountant and academic at City University, told the BBC that hefty fines for helping customers avoid tax would act as an “amazing deterrent” to advisers.

“Lawyers and accountants will not take the risk of selling these schemes. There’s a risk of a 100% fine so they’ll think they can’t afford to do it. Every honest accountant will be jumping for joy this morning that those who have been selling these schemes will be put out of practice.”