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Wednesday, 17 February 2010
HMRC Bans Tax Advice
HMRC and HMG are a tad short of cash these days, as such they are desperate to maximise the tax take.
Nothing annoys HMG and HMRC more than tax advisers who help people legitimately reduce their tax burden.
Therefore it should come as no surprise to learn that there is some draft legislation in the offing that aims to clamp down on tax advisers.
The rather interesting point about this legislation is the definition of what constitutes a "tax adviser/agent". Seemingly it is not just the media popular image of some sharp suited City legal eagle quaffing brandies, as he dispenses advice at the rate of £500 per hour, it also includes anyone who may offer even a small morsel of advice (that aims to lessen HMRC's tax take) even if this advice is for free.
You don't believe me?
Well, take a look here:
2 (1) A person is a tax agent if the person assists another person (a 'client') with
the client's tax affairs.
(2) A person may be a tax agent even if—
(a) the assistance is given free of charge,
(b) the assistance is given otherwise than in the course of business,
(c) the assistance is given indirectly to the client or at the request of someone other than the client, or
(d) the assistance is not given specifically to assist with the client's tax affairs, but the person giving the assistance knows it will be used, or is likely to be used, for that purpose.
(3) Assistance with a client's tax affairs includes assistance with any document that is likely to be relied on by HMRC to determine the client’s tax position.
(4) Assistance with a client's tax affairs also includes—
(a) advising a client in relation to tax, and
(b) acting or purporting to act as agent on behalf of a client in relation to
(5) If a client is assisted by more than one individual in a firm or business, each
individual may be regarded as a separate tax agent."
Does this matter?
Well it may well do.
Tax experts are warning that another piece of HMRC's master plan ("Working with Tax Agents: the next stage") when linked to the above could see any individual who gives anyone tax advice, that leads to a tax loss to the Treasury, as guilty of a new offence of deliberate wrongdoing, which carries a fine of between £1,500 to £50,000.
Nichola Ross Martin is warning that organisations such as the Citizens Advice Bureau, or the tax media industry would have to stop providing advice around tax issues for fear of being fined.
John Whiting, head of tax policy at the CIoT, is none too happy either. He has told Accountancy Age:
"As I read it, you or anyone saying 'invest in an ISA and save money' could technically come under the wrongdoing [rules].
The CIoT is totally supportive of HMRC getting at fraudulent tax agents, but this opens everybody up. I'm sure it's not [HMRC's] intention but it's difficult to read it any other way."
Nichola Ross Martin, on her website, expands the issue:
"The rules apply to all tax agents, but the term 'tax agent' is extended and now includes anyone who gives advice for free, and so will hit charities, such as the Citizen's Advice Bureau, Tax Aid, and Chartered Institute of Taxation's (CIOT) Tax Help for Older People, and apply to other businesses outside the accounting and legal professions such as Radio and TV, newspapers, tax publishers, websites, and tax forums. The fine will be levied at individuals, and so a business could find that all its employees are fined too.
Andrew Meeson, Vice President of the Association of Taxation Technicians (ATT) says, 'The parallel with anti-terror legislation which enables over-zealous constables to arrest tourists photographing Westminster Abbey is too striking to ignore; HMRC must not go down a similar route by painting the definition of tax agent far too inclusively.' "
HMRC recognise that they may well encounter some well deserved resistance to this lurch towards a police state
"para 2.11 A significant proportion was very critical about HMRC’s service standards and perceived lack of accountability. There was a strong sense that HMRC should not be seeking new powers which applied to tax agents until it had got its own house in order."
Surely I exaggerate I hear to wail?
No, I do not exaggerate!
Governments, by their very nature, seek to justify their existence and increase their power over the people who elect them.
This costs money.
During times of plenty, tax revenues abound and the populace is relatively docile; thus the government is able to wield power, and build its pet quangos with little or no resistance.
During times of recession and war people become less docile, and tax revenues fall.
Governments, during these times of recession and war, seek to squeeze taxpayers for every last penny in order to stay in power. Governments will use all means at their disposal to increase the tax take.
By classifying any form of "tax advice" as a potential crime, the government has in effect sought to block people's fundamental right to organise their financial affairs in the most tax efficient way possible. In other words the government seeks to turn the population into docile milch cows, whose only purpose to "feed" the government.
HMRC and HMG will of course deny that this is the case.
But they would wouldn't they?
Do you really trust them not to do whatever they think they can get away with?
This is a step towards dictatorship.
Tax does have to be taxing.
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