The document sought feedback on potential sanctions for those who design, market or facilitate the use of aggressive tax avoidance schemes.
It also consulted on the existing penalty regimes for those who tax returns subsequently proved inaccurate as a result of using these arrangements. Specifically, HMRC wants those penalties to provide a ‘credible threat’.
HMRC would not give details of the feedback received, but said it was in the process of collating the views it had received from the public and institutions.
It further said that the collated views would be published in December.
Sharon Baynham, senior tax adviser at KPMG, said that the reach of the proposals is potentially wide: “The document proposes a definition of ‘enabling’ that includes those that design or market arrangements but also those who arrange access/introductions, deliver and maintain the related infrastructure, and provide financial services.
“The definitions of ‘arrangement’ and ‘defeat’ are similarly wide, bringing in not only obvious targets such as arrangements counteracted by the General Anti-Abuse Rule (GAAR) or subject to a Follower Notice, but also DOTAS/DVAS arrangements and arrangements subject to anti-avoidance or unallowable purpose provisions.”
She believes there remains the possibility that an adviser may be subject to sanctions where a taxpayer exits or settles arrangements, rather than simply those that fail at litigation.
PWC agreed that the changes potentially impact many financial advisers, banks and lawyers by incorporating any services “connected” to the tax avoidance arrangements. It says that as a matter of best practice, intermediaries should understand what might constitute tax avoidance; define and internally communicate a code of conduct on taxation and implement a governance framework with appropriate training for staff; ensure appropriate communication and updates are provided to their clients and consider clients’ legacy tax affairs.
It said: “The challenge is to make sure that the proposals developed out of the consultation achieve the Government’s aims while allowing clients to continue to obtain independent professional tax advice without disproportionate complexity for taxpayers or advisers.”
