Banks and accountancy firms who push aggressive tax avoidance schemes could face significant fines under new UK government plans.
Currently, there is little to dissuade firms who advise clients on unlawfully exploiting tax rules. Plans set out in a consultation document released on August 17 suggest that tax advisers whose schemes are defeated in the courts might pay a fine of up to 100% of the money lost to the taxpayer.
The plans come in light of the controversy surrounding the Panama Papers scandal in April, where thousands of wealthy individuals were revealed to have avoided or evaded tax through offshore companies or structures. UK Prime Minister Theresa May pledged in July to clampdown on corporate tax avoidance, in a bid to appeal to the wider electorate.
Jane Ellison, the financial secretary to the Treasury, said in a statement:
“People who peddle tax avoidance schemes deny the country of vital tax revenue and this government is determined to make sure they pay. The vast majority of their schemes don’t work and can land their users in court facing large tax bills and other costs.”
However, sceptics question how much impact the new plans will have. Richard Murphy, chartered accountant and City University professor, said on the BBC Radio 4 Today programme:
"It's going to be an amazing deterrent, but don't expect to see it in court.
“I don't expect it to ever be used. The impact is not going to be from the fact that the rule is there in the sense of it will be imposed, but because accountants and lawyers will no longer be able to take the risk of selling these schemes."