Professional Body welcomes
increased focus of government action on 'enablers' of Tax avoidance
TAX advisers have welcomed the
government's announcement that proposals to penalise 'enablers'
avoidance schemes will be focussed on abusive arrangements that:- "no 1 could
mistake for a reasonable commercial arrangement."
The Chartered Institute of Taxation (CIOT) was responding to the draft
provisions for Finance Bill 2017, that was published by the Government, on 5 December
The Institute had been concerned that the original proposals, consulted on
in 2016, were too widely drawn and could have resulted in some Taxpayers and businesses being unable to get expert advice on complicated and
often unclear areas of Tax Law.
The CIOT had argued that the original proposals could have penalised advisers
who gave perfectly reasonable and legitimate advice to clients on commercial
The government has also announced proposals for a change to the existing penalty
legislation which applies to those who use avoidance which is exposed and
defeated by the Tax authority.
The key elements of the new enabling penalty are that
► Apply to abusive schemes defeated by HMRC.
► Impose a fixed 100% fee based penalty on everyone in the supply chain.
► Apply to advice provided after the Finance Bill 2017 receives Royal Asset
Commenting on the draft legislation, John Cullinane, CIOT's Tax Policy Director,
said:- "It is pleasing to see that after a wide ranging consultation with
the CIOT and other stakeholders, the government has taken on board our concerns
and recognises that the vast majority of Tax professionals providing advice on
commercial arrangements are in no sense 'enabling Tax avoidance,' but are
simply helping their clients to understand as well as comply with their Tax
obligations. It is crucial that they can continue to do so without being exposed
to this new penalty. The moves outlined in the draft legislation presents a
measured and balanced approach towards tackling those who enable Tax avoidance
while ensuring that the interests of the overwhelming majority of agents who
provide genuine professional advice to their clients are protected. By defining
'abusive Tax arrangements' around the principles of the
General Anti Abuse Rule (GAAR); which asks whether entering into or carrying
out the Tax arrangements could have been a reasonable course of action; the
proposals are better focussed on the small minority of advisers who profit from
devising, marketing and facilitating aggressive Tax avoidance schemes.
We are also encouraged that in proposing these changes, the government has
welcomed the progress made by the 7 leading Tax and accountancy professional
bodies in revising the code of conduct for our members, the Professional Conduct
in Relation to Taxation (PCRT)
In particular, it is heartening to note that by adhering to and upholding the
standards set out in the PCRT, the government does not expect members to be
affected by this policy."
John Cullinane continued:- "It is essential that the penalties contained
within the legislation for the minority of Tax promoters who choose not to play
by the rules act as a deterrent for others while remaining proportionate to the
nature of the offence
In this respect therefore, plans to impose a penalty based on the amount of
consideration received by the enabler for their role in the arrangements, rather
than as had been proposed, the amount of Tax avoided, are a much more
We also welcome clarification that the penalty will apply to enabling that takes
place only after the date that this legislation comes into force.
We look forward to continuing our engagement with the government in advance of
the implementation of these measures."