Spring Budget 2017 – Strengthening tax avoidance – sanctions and deterrents

HMRC and the government have introduced a raft of measures over the last few years to prevent evasion and deter taxpayers from using aggressive avoidance schemes. The latest measure follows legislation to penalise enablers of offshore tax evasion, which came into force from January 2017.

The focus on tax avoidance sanctions has recently shifted from taxpayers to professional advisers who purport to help their clients avoid tax by using aggressive arrangements that are subsequently defeated by HMRC. In the language of the legislation, such advisers are enablers of tax avoidance.

The legislation is being revised to set out when and how the General Anti Abuse Rule (GAAR) panel will consider cases involving enablers. The scope of the legislation will be broadened so that it will also apply to arrangements that seek to minimise National Insurance Contributions.

The legislation will apply to any enabling activity that takes place after Royal Assent, including but not limited to designing, marketing and managing the scheme. The penalties will be based on the fees earned from implementing the scheme and may also include “naming and shaming” of the adviser.