Institutes win extension for adviser consultation

Leading tax figures have forced an extension to the consultation period to HM Revenue & Customs' tough new proposals on how it works with advisers.

The ICAEW and representatives from the CIOT held an urgent meeting with HMRC to discuss major concerns about the draft legislation and succeeded in getting the deadline moved to 28 April 2010.

The "Working With Tax Agents: The Next Stage" consultation was set to close on 3 March, but the wording of the document caused outrage because it appeared those giving casual tax advice could face fines if found guilty of "wrongdoing. "

HMRC has now committed to allow time for further examination of the legislation and for detailed discussions to take place with interested parties to identify the concerns.

The taxman defines wrongdoing as deliberate contrivance by advisers to conceal client assets or by other failure to give an accurate picture of the taxpayers' circumstances.

The proposals warned any individual providing advice that leads to a tax loss through wrongdoing would be hit with a fine of between £1,500 to £50,000.

Andrew Hubbard, President of the CIOT said: “We fully support HMRC having a power to deal effectively with the very small number of agents who are involved in what amounts to fraud in relation to a client’s tax liabilities, but the legislation as drafted went far wider than this.

"In our opinion, it would have been unworkable and would have created a very damaging rift between HMRC and tax advisers."

The ICAEW said: "Following our meeting, HMRC appreciates that the draft legislation has caused major concerns.

HMRC confirmed to the institutes the proposals were only intended to apply to those who have been involved in what amounts to fraudulent or dishonest behaviour.