HMRC turn the anti-avoidance screw

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In August, HMRC added a new weapon to its anti-avoidance armoury: penalties on ‘enablers’.

While many were enjoying their holidays, HM Revenue & Customs (HMRC) released yet another paper examining ways of “strengthening tax avoidance sanctions and deterrents”.

Over recent years, HMRC has been gaining the upper hand in its unending battle with promoters of aggressive tax avoidance schemes:

HMRC’s latest stance is that “The people who introduced users to the avoidance, or facilitated its implementation, bear limited risk or downside when avoidance arrangements are defeated by HMRC.” Arguably this is untrue, as those who devise or promote failed schemes could suffer reputational damage and/or legal action from their disappointed clients. However, that risk is not enough in HMRC’s view and it is now proposing that anyone in the “whole supply chain of advice and intermediation” of tax avoidance should be subject to penalties. At this stage there is no proposal for how this will be done, but one option the document suggests is to base the penalty, for each party involved, on the amount of tax supposedly avoided.

It must be stressed that the HMRC paper is not targeting general tax planning, such as making full use of annual exemptions, allowances and reliefs explicitly provided in legislation. These tactics can still deliver useful tax savings without provoking unwelcome enquiries.

The purpose of this blog is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice. The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.

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