HM Revenue & Customs (HMRC) has set out plans for a new regime which will target advisers marketing tax avoidance schemes and give the taxman the power to levy fines of up to £1 million for those who fail to comply with its rules.
Under the plans advisers who offer aggressive tax planning products will be categorised as high risk and will have to comply with the new rules on reporting and transparency.
Failure to do so could see a penalty of up to £1 million with a continuing failure penalty of £10,000 for each day that the failure continues after the initial penalty is imposed.
Promoters who fail to disclose the nature of tax schemes to advisers face a £50,000 fine.
HMRC also plans to impose a higher standard for a reasonable excuse or reasonable care defence, so promoters will find it harder to make excuses for dodging fines and not complying with the new rules.
HMRC said its motives behind the new regime were:
- to deter the use of avoidance schemes from the outset;
- to change the behaviour of high-risk promoters and those who are potentially high-risk
- to force high-risk promoters to provide details of their products to HMRC
- to require high-risk promoters to inform their clients of the consequences of their high-risk designation
- to establish a higher threshold for reasonable excuse and reasonable care
- to ensure that the high-risk promoter’s clients understand the risks and consequences of engaging in these schemes, including the new follower penalties.
David Gauke (pictured), exchequer secretary to the Treasury, said: ‘Never before have the stakes been raised so high and the disincentives to market and participate in avoidance so strong. I welcome public input into the proposals in this document and their further development.’
The consultation closes to responses on 4 October.