City firms that help businesses run tax avoidance schemes could face huge financial penalties under fresh Government proposals.
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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.
LONDONBritain set out plans on Wednesday to punish financial advisers who tell their clients how to avoid paying tax, including hefty fines created to target what it called the “supply chain of tax avoidance”.
The planning firms that help them avoid taxes now face just a few risks and penalties.
Whitehall sources said that the proposals could allow HMRC officials to stop profiteering around aggressive avoidance schemes which have been defeated in the courts. In March a tax tribunal ruled that the scheme was illegal.
The consultation document is expected to clarify rules around whether proven tax avoiders have taken reasonable care to ensure their tax returns do not contain inaccuracies, making it simpler to enforce penalties when avoidance schemes are defeated.
The government isn’t targeting legitimate ways of cutting tax bills, such as tax breaks for putting money in pensions or Individual Savings Accounts.
“These tough new sanctions will make would-be enablers think twice and in turn reduce the number of schemes on the market”, said financial secretary to the Treasury Jane Ellison.
The avoidance it’s trying to root out involves bending the rules to gain a tax advantage that Parliament never intended, an abuse which costs almost £3bn a year.
In the wake of the revelations the five largest European Union economies, Britain, Germany, France, Italy and Spain, agreed to share information about secretive business owners and trusts.
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In a July speech just before she was made prime minister, May named Amazon (AMZN.O), Starbucks (SBUX.O) and Google (GOOGL.O), all of whom have been criticised over the amount of tax they pay in Britain, saying everyone had a responsibility to pay taxes.
