Opinion Former Article

Avoidance schemes - CIOT welcomes robust approach on promoters

Commenting on the publication today of draft legislation and a consultation document on tackling promoters and enablers of tax avoidance schemes, CIOT Tax Policy Director John Cullinane said:

“The Government are right to be taking a robust approach to those who continue to devise, promote or sell tax avoidance schemes. There should be no place for such people and their schemes in the tax services market.

“As the Government’s consultation document states: ‘Promoters of tax avoidance schemes are rarely members of professional bodies.’ Indeed many – perhaps a majority – are not tax advisers or tax agents at all but rather operate in boutique firms focused mostly or entirely around such avoidance schemes.

“There is anecdotal evidence of promoters of tax avoidance enticing taxpayers to use their schemes on false pretences as to the risks and likely consequences of entering the scheme, and then failing to support the taxpayers (except in return for significant further fees) when HMRC investigate and perhaps litigate. The possible interventions necessary to address this issue need to apply whether the promoters in question are giving, or purporting to give, advice or not.

“The draft legislation published today changes rules on Disclosure of Tax Avoidance Schemes (DOTAS) and the Enablers Penalty Regime to require information to be provided at an earlier stage. While we will be looking at the detail to check that the changes will work practically this does seem a sensible element in HMRC’s strategy.”

The Government have also launched a call for evidence on tackling disguised remuneration tax avoidance. CIOT President, Glyn Fullelove, commented:

“Like the promoters and enablers consultation this call for evidence comes out of the Morse review of the loan charge.

“Despite the persistent efforts of successive governments to stamp it out, disguised remuneration (DR) continues to be a stubborn and insidious form of tax avoidance. Schemes targeting agency workers using umbrella companies continue to operate. The workers themselves may have no idea they are avoiding tax until contacted by HMRC, by which time the umbrella company may have disappeared, leaving the agency worker to pick up the bill.

“This is a very broad call for evidence – essentially a plea from the Government for ideas on how the remaining DR schemes and other avoidance can be stopped. We look forward to engaging with HMRC and providing constructive input into how such schemes can be stopped at source”

Notes for editors

 

Details of the Government’s announcements can be found via these links:

New proposals for tackling promoters and enablers of tax avoidance schemes

Call for evidence: tackling disguised remuneration tax avoidance

 

The Chartered Institute of Taxation (CIOT)

 

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

 

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

 

The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk (Out of hours contact: George Crozier, 07740 477 374)

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