Treasury opens the Pandora’s Box of tax avoidance

Treasury opens the Pandora’s Box of tax avoidance

The Treasury's proposals in its 'Lifting the Lid on Tax Avoidance Schemes' consultation creates a storm

THE TREASURY’S latest initiative in its continued crusade against tax avoidance is already proving to be controversial.

David Gauke’s announcement of a consultation on extending the disclosure of tax avoidance schemes (DOTAS) legislation included the proposal that the taxman can request client lists from firms and individuals suspected of providing abusive schemes.

The government’s moralising and cultivation of popular distaste for avoidance appears to have stirred up equal and opposing anger among many practitioners.

Naturally, many have already cried taxpayer confidentiality and accused the government of embarking on a ‘name and shame’ policy for – as David Ingall of JWPCreers puts it – “doing nothing more than offending the latest media campaign against accumulating wealth”.

Fundamentally, they say, if the “shoddy” and ambiguous legislation allows avoidance to become an issue, and if parliament does not approve of how some people obey the law, they should make changes accordingly.

Others, though, are less concerned about the implications of disclosing clients’ details. Indeed, as some noted, accountants routinely provide details of their clients in their tax returns to the taxman, while DOTAS requires disclosure within five days of entering a scheme.

Some have been more measured in their reception of the proposals. Patrick Stevens of the CIoT has already said that his institution would generally rather see current rules better enforced than see new ones introduced. But he recognises some “have been playing fast and loose with the disclosure rules” and, as such, thinks it is “understandable” that the government targets those people.

There are some, too, who are hopeful the consultation will provide greater definition on what constitutes egregious tax planning, although Exchequer secretary David Gauke told the Policy Exchange think tank that recognising aggressive abuse is inherently tied up with an extrinsic sense of what is reasonable.

The overriding feeling is one of caution and concern. ICAEW chief executive Michael Izza, who recently courted controversy among advisors over his disdain for the provision of aggressive schemes, holds a significant reservation over the move to disclosing client lists.

In light of the ICAEW’s push for legal professional privilege for their advisors’ clients in line with tax lawyers, Izza is worried the Treasury’s attempt at ‘lifting the lid’ would represent a retrograde step in the ICAEW’s pursuit of that privilege.

Could the taxman enforce all these changes? It is doubtful. New loopholes woud appear further down the line, suggests MHA Macintyre Hudson tax director Alastair Kendrick.

This, it seems, could be a long, drawn-out consultation for the Treasury and David Gauke. In lifting the lid, advisors believe they will open Pandora’s Box, which will not be easily shut.

Related Articles

R&D tax relief claims are rising, HMRC report reveals

Corporate Tax R&D tax relief claims are rising, HMRC report reveals

2m Emanuela Hawker, Reporter
Watch out when winding up

Corporate Tax Watch out when winding up

8m Emma Rawson, ATT Technical Officer
HMRC large business tax enquiry duration rises to 3 years

Corporate Tax HMRC large business tax enquiry duration rises to 3 years

11m Emma Smith, Managing Editor
‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

1y Emma Smith, Managing Editor
OTS report: Corporation tax should follow accounts

Corporate Tax OTS report: Corporation tax should follow accounts

1y Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

1y Emma Smith, Managing Editor
Q&A with the Financial Secretary to the Treasury

Corporate Tax Q&A with the Financial Secretary to the Treasury

1y Emma Smith, Managing Editor
Spring Budget 2017: Making Tax Digital

Business Regulation Spring Budget 2017: Making Tax Digital

2y Shereen Ali, Deputy Editor