Tax avoidance promoters must publicise HMRC’s monitoring

HIGH-RISK PROMOTERS of tax avoidance schemes face fines of up to £1m if they fail to publicise when HM Revenue & Customs is monitoring their activity.

The rules, put forward by financial secretary David Gauke (pictured), are aimed at making potential customers aware of the risks associated with schemes before entering into them.

Laws introduced last summer allow HMRC to issue these promoters identified as ‘high risk’ with conduct notices requiring them to change their behaviour.

The new rules mean if a promoter does not comply with the terms of a conduct notice they can be issued with a tougher ‘monitoring notice’, which, among other things, will mean the promoter will be publicly named by HMRC; and will have to tell their clients that they are being monitored. If they fail to comply with the conditions of the monitoring notice they could face fines of up to £1m.

It follows similar steps in taken February against repeated participants in tax avoidance schemes, which could see them face a surcharge on the repeated or concurrent use of tax avoidance schemes that fail. Conduct notices could require serial avoiders to do – or refrain from doing – certain things in order to improve their tax compliance.

A history of engaging in avoidance schemes, the use of schemes marketed by high-risk promoters and failure to comply with DOTAS, could all attract the use of these measures, HMRC said in a consultation.

David Gauke said: “The government has taken unprecedented steps to clamp down on tax avoidance. Our tough new rules will force high risk promoters to change their behaviour and help protect taxpayers from unscrupulous advice. Promoters who do not change their ways should be in no doubt – HMRC is taking swift and decisive action to use these new rules.”

HMRC has already written to a number of promoters warning them of the consequences if they don’t change their behaviour, and has also sent the first conduct notice.

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