HM Revenue and Customs (HMRC) plans to enforce tougher penalties on accountants, advisers and planners who help their clients aggressively avoid taxes. The move is intended to penalise everyone in the tax-avoidance chain.
The proposed plan is set out in a consultation document. This is set to be released on Wednesday (17 August) with Jane Ellison, the financial secretary to the Treasury, opening it to a 12-week consultation.
If these plans become effective, all tax-dodging planning firms, be they accountants, lawyers or advisers could be liable to pay a fine of up to 100% of the tax their clients underpaid. The government will, however, only target firms that help clients exploit tax rules, including the setting up of offshore tax havens.
It will not take any action against legitimate ways of saving tax, such as putting money in pensions or individual savings accounts (ISAs). Once effective, the plan will also ensure it is simpler for the Treasury to enforce such penalties on these firms.
The plan is in stark contrast to current rules, where only the clients, meaning the people and businesses who avoid paying taxes face financial penalties. The planning firms that help them avoid taxes currently face just a few risks and penalties.
"People who peddle tax avoidance schemes deny the country of vital tax revenue and this government is determined to make sure they pay. The vast majority of their schemes don't work and can land their users in court facing large tax bills and other costs," Ellison was quoted as saying by the Guardian.
The move comes just a month after UK Prime Minister Theresa May said she would clamp down on corporate tax avoidance. "It doesn't matter to me whether you're Amazon, Google or Starbucks, you have a duty to put something back, you have a debt to fellow citizens and you have a responsibility to pay your taxes," she said, according to the BBC.
The proposed rules also follow the Panama Papers leak, which revealed a number of people using tax havens as a means to evade taxes. The UK government has since set up a new task force to investigate tax-dodging allegations.