TaxAdministrationTaxman to dole out rewards for good avoidance behaviour

Taxman to dole out rewards for good avoidance behaviour

HMRC announces a series of plans to make tax avoidance 'not worthwhile' by 2008

Advisers could be rewarded for not pushing complicated avoidance schemes,
under plans being drawn up by the taxman.

Big businesses could also be landed with huge penalties for botching the
implementation of complex avoidance schemes, Geoff Lloyd, director of HM Revenue
& Customs central compliance directorate, said as he announced a series of
plans to make tax avoidance ‘not worthwhile’ by 2008.

Businesses will now have to be scrupulously careful in the implementation of
any schemes, as any errors could mean penalties of 30% of the tax due.

Anti-avoidance campaigners welcomed the news, saying those large businesses
that had so far avoided penalties would finally face the consequences of their
actions.

In a conference speech to advisers, Lloyd said that mistakes made in
avoidance schemes would be punished. ‘People don’t always get schemes right. We
think it may represent negligence and should be treated as such,’ he said.

On the other hand, advisers who steered clear of avoidance would see the
benefits. ‘We want to leverage the benefits to advisers of reducing risk for
their clients,’ Lloyd said.

Bill Dodwell, tax partner at Deloitte, said he did not understand how
advisers could be rewarded. ‘I would love to hear how that is possible under the
law,’ he said.

Richard Murphy, the anti-avoidance campaigner, said that advisers working on
risky schemes might see more investigations into their clients.

HMRC is looking to outline what it regards as avoidance later this year and a
spokesman said moves were in their ‘early days’.

Lloyd denied suggestions that anti-avoidance initiatives had harmed UK
competitiveness. ‘We think it is perverse to see efforts to level the playing
field as part of the problem rather than the solution. Tax avoidance cannot be
the key to competitiveness,’ he said.

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