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British tax advisers could face massive fines

The England-and-Wales Law Society Gazette says that fines for professional advisers who “undermine the tax system” in Britain could run into millions of pounds, under new powers proposed by the British government.

The Gazette says that a consultation document published alongside Chancellor Rachel Reeves’ spring statement also proposes giving HM Revenue & Customs (HMRC) new powers to obtain information from tax advisers and to publish the details of advisers who are subject to HMRC sanctions.

According to the document, advice facilitating “non-compliance” is responsible for a 'tax gap' of 4.8% of theoretical liabilities. 

In 2022-23 this added up to Stg £39.8 billion.

Higher penalties

The new proposed powers include:

• Raising the financial penalty for dishonest conduct from the current maximum of £50,000 to one based on the potential loss of tax revenue: “Where the non-compliance causes significant harm to the tax system, this could result in a penalty of millions of pounds.”
• Enhancing powers to enable HMRC to investigate and request information from tax advisers,
• Broadening the scope of disclosure to professional bodies, and
• Publishing details of individuals or businesses subject to an HMRC sanction: “By reviewing published information, taxpayers can make informed choices about which tax advisers to use or avoid”.

HMRC intends to engage with legal regulators “to discuss the operation of their codes of conduct and how HMRC can better support them to take the most effective appropriate action against their members when they are breaching these rules”.

James Murray (exchequer secretary to the Treasury) said that most British tax advisers were “dedicated professionals” who adhered to rigorous standards, but added that “a minority” fell short of these standards.

The Gazette quoted one tax expert, former Clifford Chance partner Dan Neidle, as describing the proposals as “probably the toughest ever introduced”.