Concerns over current proposals for tackling tax avoidance promoters

The government is being urged to revisit its proposals aimed at tackling rogue tax agents and their promoters.

What is the new legislation and how will it work?

The new legislation aims to strengthen HMRC’s ability to deter and respond to tax adviser behaviour that facilitates non-compliance.

Proposed changes include:

• Expanding the scope of the disclosure of tax avoidance schemes (DOTAS and DASVOIT) regimes.
• Introducing a universal stop notice and promoter action notice.
• Tackling legal professionals designing or contributing to the promotion of avoidance schemes.

There will be a legal requirement for tax advisers who interact with HMRC on behalf of clients to register with HMRC and meet minimum standards. This is expected to come into force from the 1^st of April 2026 (with a minimum three-month transitional period).

Current proposals are set to ‘miss their target’

While preventing those who continue to devise, promote or sell mass-marketed tax avoidance schemes is of course welcomed, there are concerns about this draft legislation.

The Chartered Institute of Taxation (CIOT) is warning the government that this won’t catch all of those it is aimed at, but will make it harder for some taxpayers to get the advice they need to comply with tax laws.

The CIOT outlined its concerns in a letter sent to Exchequer Secretary to the Treasury, Dan Tomlinson.

While supporting the raising of standards in the tax advice market, it argues that the current proposals are not well targeted, imposing potentially unworkable conditions on tax agents, whilst many of the “bad actors” who are the real target of these measures will be out of scope and able to continue their abuse of the system.

The institute believes that without changes, the proposals will create a situation where many reputable advisers withdraw from giving advice where the meaning of complex tax legislation is unclear, or where the potential tax liability is high, because of the risk of even honestly given advice leaving them liable to a very large penalty or even a criminal offence.

This could mean some taxpayers may struggle to obtain tax services – leading to an increased number of errors and potentially a larger tax gap.

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