Budget 2017: tax avoidance enablers rules to raise £100m in fines

Fines against enablers of tax avoidance schemes are set to generate an extra £100m for the Exchequer, projections in the Budget show.

Originally proposed in August 2016, the government is to introduce a penalty for individuals or entities who ‘enable the use of tax avoidance arrangements’ which HMRC later defeats. An ‘enabler’ of tax avoidance includes anyone in the supply chain who benefits from an end user implementing tax avoidance arrangements and without whom the arrangements as designed could not be implemented.

Over the course of the parliament, the Treasury expects the measure to generate £100m by 2020-21, a costing in the Budget document shows.

Fines could be imposed on accountants who promote the schemes at 100% of the value of the unpaid tax as a result of using an aggressive, overt tax avoidance scheme, which is viewed is beyond acceptable tax planning by the government and HMRC.

In addition to the windfall for the public purse, enablers could find their cases before the General Anti Abuse Rule (GAAR) Advisory Panel under revised legislation announced in the Budget.

The latest revision provides greater detail about when and how the GAAR advisory panel will consider enabler cases, while the scope of the regime has been expanded to take in arrangements seeking to avoid national insurance contributions.

The GAAR was introduced in 2013 to catch contrived and absuive tax avoidance arrangements, with the advisory panel to adjudicate on whether schemes were caught by the rule.

The changes will apply ‘prospectively’ after Royal Assent is granted to the Finance Bill 2017.

Further detail on Strengthening tax avoidance sanctions and deterrents is available in the Overview of tax legislation and rates.

Published on: 10 March 2017 - By: CCH Daily

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