Tougher consequences for promoters of tax avoidance
Executive summary
- AAT strongly supports any reforms which tackle promoters of tax avoidance. We welcome both the new criminal offence for failing to comply with a Stop Notice and the expedited process for disqualifying directors of companies involved in tax avoidance.
- We would welcome more information on how often HMRC plan to use its new criminal investigation powers and what resources are available to fund it. A deterrent is only effective if it is perceived that it will realistically happen. AAT’s concern is that the new criminal offence will not be used enough to be effective in deterring promoters from ignoring the Stop Notice.
- Legislation for the proposals should be enhanced with a requirement for all paid-for tax advisors and accountants to be members of a recognised professional body. The consultation notes that promoters are rarely members of professional bodies. It follows then that a compulsory requirement to join a recognised professional body for all paid-for tax advisors and accountants would have a further positive impact in supporting these measures.
- Compulsory professional body membership would be an effective deterrent for both promoters of tax avoidance and ‘shadow directors’. Under this requirement, if the person was expelled from one professional body, they would in effect lose their right to practice as the expulsion would be shared with other bodies. This would act as a significant deterrent and could apply to "shadow directors" who exercise control or influence over the company.
- Joint liability should be considered as a way to deter those who directly or indirectly control or exercise influence over a company. This would not only introduce an element of fairness in reflecting the reality of tax advice arrangements, but also discourage employment agencies, umbrella companies or engagers in directing clients to adopt tax arrangements.
- AAT does not believe that the disqualification of company directors for tax matters is being applied in a reasonable, coherent or fair manner and that this is an area that requires reform. This could be addressed by legislating for the guidance laid down by the Sevenoaks Court of Appeal case to be followed in all cases rather than being used only from time to time.
Related consultation responses
Modernising tax debt collection from non-paying businesses
We welcome many of the proposals but believe the suggestion that this is to reflect the changing nature of the economy and new business practices is misleading.
Corporate re-domiciliation
AAT supports the principle of the UK aligning its re-domiciliation approach with its international competitors if opportunities for abuse are kept to a minimum.
HMRC Performance 2020-2021: Public Accounts Committee inquiry
We recognise HMRC's good work in relation to avoidance and evasion but much more could be done. We also believe HMRC must do more in relation to debt recovery.
Autumn Budget and spending review 2021
Our response includes comments on tax after Covid, the national living wage, personal tax, pensions and savings, Corporation Tax, and business rates.
