We have all heard the horror stories about dishonest tax advisors encouraging clients to enter into aggressive tax avoidance schemes which are doomed to fail and then disappearing leaving the Taxpayer to face the wrath of HMRC and the inevitable financial penalties, but what are HMRC planning to do to protect innocent taxpayers?
Last year, the UK government introduced measures aimed at improving tax compliance and reducing the tax gap permanently. A key focus was to raise standards in the tax adviser market and there were a number of proposed powers including the requirement for agents to register with HMRC but there are still a small number of dishonest advisors bringing the profession into disrepute.
Current Regulations
HMRC currently has authority to investigate tax advisers, but only with clear evidence of dishonesty. To obtain necessary information, it must seek approval from the First Tier Tribunal. Penalties range from £5,000 to £50,000, and in some cases, details of dishonest advisers may be published. But if the tax “saving” is in the hundreds of thousands the sanctions seem far too lenient and are unlikely to act as a deterrent.
What’s next?
The latest Spring Statement set out further efforts to improve tax adviser regulations and the government launched a consultation setting out their plans to strengthen HMRC’s powers in tackling advisers who facilitate non-compliance.
Proposed New Powers
The consultation explores expanding HMRC’s powers to:
- Investigate tax advisers suspected of facilitating non-compliance.
- Request information without tribunal approval.
- Impose penalties proportional to the potential tax lost due to adviser misconduct.
- Publish details of sanctioned tax advisers when non-compliance surpasses a set threshold.
These measures aim to ensure HMRC has the necessary tools to effectively regulate the tax adviser market and safeguard the integrity of the tax system. Whether the measures will have the desired effect remains to be seen and Taxpayers should exercise caution when choosing their tax advisor and relying upon their advice.
You can trust Relatus
Relatus is made up of members of the ATT and the Law Society meaning that we must meet the professional standards and guidelines of those professional bodies. We hold ourselves to the highest standards of professional conduct and always ensure our knowledge and skills are up to date.
We will never advise you to enter into an aggressive tax avoidance scheme and will always advise against taking any action which goes against the purpose of the legislation leaving you at risk of interest and penalties.
If you want honest, professional advice from an experienced advisor who is a member of a professional tax body, contact the team at Relatus today.
