In Monday’s draft of the Finance Bill, HM Revenue & Customs (HMRC) confirmed that it will introduce heavy penalties for ‘enablers’ of tax avoidance as the UK moves to stamp out dodgy tax practices.
Setting out a clear definition, the tax office said enablers include independent financial advisers, tax accountants and others “who earn fees and commissions” in marketing tax avoidance schemes, even if their activities do not promote such arrangements.
The clampdown also includes lawyers, banks, trustees, accountants and anyone involved in developing, advising and assisting in tax avoidance schemes.
As a result, advisers found guilty of helping their clients avoid paying tax – including through the use of offshore tax havens – face heavy fines of upto 100% of the tax avoided.
“The people who introduced users to the avoidance, or facilitated its implementation, bear limited risk or downside when avoidance arrangements are defeated by HMRC."
HMRC said such a punitive measure is designed to “penalise everyone in the supply chain who has enabled avoidance arrangements”.
Not limited to avoidance
HMRC added that the sanctions announced on Monday also include advisers and businesses which help clients evade tax by setting up and running offshore structures.
These include:
- Acting as a “middleman” – by arranging access and providing introductions to others who may provide services relevant to evasion
- Providing planning and bespoke advice on the jurisdictions, investments and structures that will enable the taxpayer to hide their money and any income, profit or gains
- Delivery of infrastructure including setting up companies, trusts and other vehicles that are used to hide beneficial ownership; opening bank accounts; providing legal services and documentation which underpin the structures used in the evasion such as notary services and powers of attorney
- Maintenance of infrastructure by providing professional trustee or company director services including nominee services; providing virtual offices, IT structures, legal services and documentation which obscures the true nature of the arrangements such as audit certificates
- Financial assistance – helping the evader to move their money or assets out of the UK, and/or keep it hidden by providing ongoing banking services
- Non-reporting – not fulfilling their reporting, regulatory or legal obligations, which in itself helps to hide the activities of the evader from HMRC.
