Concerns over tax avoidance criminal offence proposals

HMRC has released a consultation with proposals that would result in tougher consequences for tax avoidance offences.

However, this has been met with some concerns.

The CIOT has warned HMRC against creating a new strict liability criminal offence for failing to disclose notifiable arrangements under the Disclosure of Tax Avoidance Schemes (DOTAS) regime without a reasonable excuse.

It argues that DOTAS is much too wide in its current formulation to be suitable for a criminal offence, and that applying the proposed offence to all the DOTAS hallmarks seems excessive, especially since the proposal is intended to be a response to specific issues with disguised remuneration mass-marketed tax avoidance schemes.

Commenting on the proposals, John Barnett, CIOT’s Vice President, said, “The government are right to be taking a robust approach to those who continue to devise, promote or sell mass-marketed tax avoidance schemes. There should be no place for such people and their schemes in the tax services market.

“However, every proposal to increase HMRC’s powers like this needs to be tested against a hypothetical test of what would happen if an HMRC officer decides to use or target the legislation inappropriately.

“The present proposal places too high a level of reliance on HMRC’s unpublished (and as such, not transparent) internal governance process to provide appropriate, independent safeguards and work effectively, so that such an outcome could never happen in practice.

“It is essential for building and maintaining trust in the tax system that the way HMRC use their powers and operate safeguards can be effectively monitored and subjected to appropriate oversight.”

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