The new rules mean that promoters now have to inform potential and existing customers that they are being monitored by HMRC.
Under existing laws introduced last summer, those promoters identified as high risk were simply issued with a conduct notice, which told them they needed to change their behaviour.
But new tougher rules mean that promoters who fail to comply with the conditions of the conduct notice will be issued with a “monitoring notice”. Failure to comply with the conditions of the monitoring notice – including notifying clients that they are being monitored – could result in a penalty of £1m.
“Swift and decisive action”
“Our tough new rules will force high risk promoters to change their behaviour and help protect taxpayers from unscrupulous advice,” said financial secretary to the Treasury, David Gauke, who introduced the new laws.
“Promoters who do not change their ways should be in no doubt – HMRC is taking swift and decisive action to use these new rules.”
The UK’s tax authority has already written to a number of promoters warning them of the consequences if they don’t change their behaviour, and has also sent the first conduct notice.
“Ongoing avalanche”
Andrew Watters, director at legal advisory firm Thomas Eggar, said: “HMRC is going to have come up with some fairly precise definitions of what is unacceptable avoidance planning. I think advisers would welcome any guidance, as many issues have revolved around the definition of avoidance and what is acceptable and not acceptable.
“There is no question that the Revenue has been extremely irritated with the ongoing avalanche of advisers helping people avoid tax, and I think they have already been successful in making taxpayers more aware that some planning might not be a good idea.
“But some advisers are not exactly sure of the tax technical details of the schemes, so I think if these new rules encourage advisers and their clients to have frank conversations about tax planning then that is a good thing.”
