You’d be forgiven for missing it in the Chancellor’s Spring Statement. Between talk of inflation and fiscal headroom, one of the most aggressive anti-avoidance crackdowns in UK tax history barely rated a mention, according to a leading think tank.
According to Tax Policy Associates,t buried in the paperwork is a suite of proposals that, if passed, could effectively criminalise the tax avoidance industry...and not just the dodgy operators on the margins.
It’s the clearest sign yet that the Government is getting serious about the mini-economy of promoters selling doomed tax schemes to unsuspecting punters.
Top of the list: a new “universal stop notice” that would allow HM Revenue & Customs to outlaw entire categories of tax avoidance schemes, not just target one promoter at a time.
Promoting, enabling or even facilitating a banned scheme could become a criminal offence — and that includes any third parties who help market or support them, according to the Tax Policy Associates' analysis, which was penned by Dan Neidle.
The Government also wants to criminalise breaches of DOTAS, the Disclosure of Tax Avoidance Schemes regime. Right now, promoters routinely ignore it, counting on delays, legal wriggle room and limited penalties.
The proposed changes would hit individuals (including company directors) with criminal sanctions, with a defence of “reasonable excuse” for genuine advisers.
There’s more. Penalties could rise to double the fees a promoter makes from a scheme. Legal privilege could be waived where schemes are marketed using counsel’s opinion.
And the names of lawyers involved in designing these schemes could be published, a move aimed at curbing what Neidle calls “corrupt” practices where barristers lend credibility to schemes they know will not hold up in court.
These measures won’t land without a fight, and they won’t matter without enforcement. Neidle argues that a specialist HMRC unit, staffed by tax experts and white-collar crime lawyers, is essential if the rules are to be more than just paper threats.
But the message is clear: the days of slap-on-the-wrist deterrents may be over. The tax avoidance industry has been put on notice — in more ways than one.