HMRC To Act As Judge and Jury?

In August HMRC published a consultation document "Raising The Stakes on Tax Avoidance" that made proposals on two avoidance issues:

"The first proposes a new set of obligations for high-risk promoters, their intermediaries and users. 

The second is to encourage users of avoidance schemes to settle their tax affairs after similar cases have lost in court or tribunal. 

The Government also seeks views on a proposed extension to the prescribed information to be provided under the Disclosure of Tax Avoidance Schemes (DOTAS) rules."

The consultation closed on 4th October.

The ICAEW Tax Faculty has published its concerns that the proposals are not sufficiently targeted, and would impose substantial extra compliance burdens and costs on tax advisers who are not themselves engaged in promoting dubious tax schemes.

Specifically the Tax Faculty states:

"We are concerned that the proposals as currently suggested may be too widely targeted and will result in substantial extra compliance burdens and costs imposed on tax advisers who are not engaged in promoting dubious tax schemes. The danger then is that the proposals will not succeed. 

The 20 or so promoters at whom the measures are aimed continue to operate in exactly the same way as they do now but considerable extra compliance costs have been imposed on everyone else to no useful purpose. If action is to be taken against high-risk promoters then before any individual or firm is designated as such we believe that there should be a system of independent review of the relevant HMRC proposal similar to the Advisory Panel under the recently introduced General Anti-Abuse Rule (GAAR). 

It is not acceptable for HMRC to act as judge and jury in what is a highly sensitive area, particularly given that the measures appear to be too widely targeted."

Tax does have to be taxing.

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