The Chief Secretary to the Treasury, Danny Alexander, was quoted on the Andrew Marr show a few days ago as saying that companies that help clients evade tax should face the same penalties as the tax evaders.
Oh dear…
Although this latest round of tax dodger pursuit was triggered by the HSBC fiasco, it does look as if promoters of “tax schemes” across the board will be affected by this legislation (if it ever reaches the statute books).
The problem, of course, is how does one define “tax evasion/avoidance” for legislation of this sort?
DOTAS rules on abusive arrangements and there seems to be a consensus that this would not include a self employed client that is advised to incorporate their business to save tax. But where does one draw the line?
We would urge our readers to lobby their professional organisations without delay. The Treasury cannot legislate on the one hand that a particular transactions is legal, and then penalise those that use the strategy in association with other strategies to reduce their tax charge.
Whilst many of us would have little sympathy with outlandish tax avoidance arrangements, and their promoters, legislation that aims to punish those who advise on inventive use of the tax code should be resisted.
Hopefully, there will be no draconian clauses regarding this issue in the Budget next month, but whenever, and if ever, Danny Alexander’s comments are acted upon, professionals should be ready to defend their client’s interests.
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