They allow HMRC to force tax planning companies that they are monitoring to state on their website that they are being monitored by HMRC. They must also inform all present and prospective clients, through their marketing material and other communications to their clients, that they are being monitored by HMRC.
Those promoters of tax planning schemes must also issue their clients with a 'promoter reference number'. This promoter reference number must then be used by the clients of the tax scheme promoter on their tax returns and other material they send to HMRC.
If the tax adviser fails to do the above they can face fines of up to £1 million.
The proposed legislation will also make it a criminal offence for those tax advisers to dispose of relevant documents.
Out of business
International law firm, Pinsent Masons says that although HMRC will not issue a £1 million fine for a tax adviser’s first offence of promoting tax avoidance schemes they will be able to do so if they continue to promote tax planning schemes that HMRC views as avoidance and fail to meet the restrictions that HMRC places on their marketing.
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Ray McCann, Partner of Pinsent Masons said: “HMRC would like to drive the providers of tax avoidance schemes out of business and they have already had success in this area with some of the more prominent promoters of tax schemes already having shut up shop.
“£1m fines are a sudden and unprecedented escalation of the sanctions that HMRC have against promoters of tax planning schemes and again makes clear the determination of the Government to prevent abusive tax schemes.
“These rules will very publicly stigmatise these tax advisers and mean that they will struggle to win new clients and carry on in business.
“Since HMRC will be able to apply these rules before any Tribunal or Court has considered the efficacy of the tax planning scheme being promoted the severity of the proposals will raise concerns about the infringement of human rights.”
Marketing
HMRC make it clear that these new rules will extend to accountants and lawyers who market tax planning schemes that HMRC deems to be tax avoidance schemes.
Ray McCann says that the proposed legislation will also put the clients of these tax advisers at a very significant disadvantage as HMRC will have a specially extended time period in which to investigate those clients.
Ray McCann also explains that, despite HMRC assurances, many advisers will be concerned that it will be easier to breach one or more of the proposed threshold conditions than HMRC say.
The proposals are included in the Finance Bill and are expected to become law this month.
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Susie Hughes © Shout99 2014
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