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As part of the Government's plans to tackle the supply side as well as the demand, there will be a consultation on new naming and shaming of promoters of tax avoidance schemes. This follows a recent similar exercise from HMRC where they named and shamed deliberate tax avoiders. However, that came in for considerable criticism as their targets seemed to be very much at the low end of the tax evasion scale, such as hairdresser and grocer. (See: HMRC names and shames in tax rogues gallery Feb 2013, Shout99).
‘Promoter penalties’
Now the Chartered Institute of Taxation (CIOT) fears that the ‘naming and shaming’ policy will pose some difficult issues around definition and implementation. As well as a need to protect innocent parties, there is a possibility that some might just treat it as helpful, free advertising.
CIOT President, Patrick Stevens, said: “The CIOT has previously raised concerns about promoters of schemes that have no realistic chance of success and suggested that ‘promoter penalties’, in a similar manner to misselling, may be appropriate.
“But the new proposals take this in a quite different direction. In all of these areas the difficulty is likely to be in determining the borderline. The CIOT understands and supports the Government’s need to crack down on abusive schemes, but there must be protection for innocent parties and normal tax planning.
“There need to be proper procedures to ensure it is only those who promote abusive schemes that are targeted. It must not be dependent solely on the view of HMRC, which could change over time; there must be certainty over what behaviour would be caught and an appeals process to ensure justice takes place.
"The Government also need to be sure that this will actually act as a deterrent – there is a risk that some of the promoters likely to get caught by this will see it as helpful free advertising.
“We are pleased to note that the Government propose to consult in this area.”
More information
More information on the Budget issues of relevance to freelancers and small businesses are available in the Political News section.
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Susie Hughes © Shout99 2013
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