As part of today’s ‘Tax Day’ proposals, Kate Ison, partner and tax specialist at global law firm Bryan Cave Leighton Paisner (BCLP), highlights that the government’s policy papers and consultations included a consultation on “clamping down on promoters of tax avoidance”. This confirms the previous thinking that promoters of tax avoidance are to come under further scrutiny with the government calling for evidence to improve Britain’s tax system.
Ison comments:
“The government has used the opportunity of the first ever Tax Day to continue its long-running campaign against tax evasion and tax avoidance and tax non-compliance, by announcing consultations which propose further measures to tackle all forms of tax non-compliance.
One of the key targets of the government’s crackdown on tax non-compliance is the promoters of tax avoidance. This focus is not new, and a plethora of measures have been introduced in recent years to empower HMRC to take action against those who facilitate and promote tax non-compliance. Today’s consultation proposes the introduction of extensive new powers which will enable HMRC to seek freezing or security orders against promoters where HMRC consider there is a risk that the promoters may hide or dissipate their assets to avoid paying any penalties which may be imposed. The consultation also proposes enabling HMRC to present a petition to wind up a corporate promoter, and disqualify directors, outside of insolvency where there has been a significant breach of anti-avoidance legislation.
The new powers mark a new and hardened approach by the government and could have far-reaching consequences. Despite the government’s previous concerted efforts to disrupt the tax avoidance supply chain, a minority of promoters have remained in the industry. Today’s proposals go further than any previous measures and, if enacted, would directly strike the core of a promoter’s finances, at best, and entire business at worst. We expect it will have a deterrent effect on some promoters and will cut off the so-called tax avoidance supply chain where promoters are wound up. As regards the proposal to disqualify directors who are involved in significant breaches of anti-avoidance legislation, while it is important to ensure that individuals who are knowingly promoting aggressive avoidance cannot simply re-appear as a director of a newly established promoter or enabling company, care will need to be taken to ensure that appropriate safeguards are included to protect innocent directors who may be unknowingly involved or unaware of the breaches.”
