With the wind firmly in the sails of the campaign against abusive tax avoidance, the Treasury is now proposing to require promoters of tax avoidance schemes to disclose details of those who choose to use such schemes. Although such disclosure would not be public, due to requirements of taxpayer confidentiality, if Tribunal or court cases were brought in respect of schemes then individuals who had used schemes could potentially be identified.
The proposals also target those who promote, run and manage such schemes, who will be under an individual as well as a corporate responsibility to make disclosure in respect of schemes. This will mean it will no longer be possible for them to close down firms or move firms and avoid responsibility for their actions. Also, where accountants put forward misleading claims about the effectiveness of tax avoidance schemes, they will be pursued using financial services mis-selling rules. Fines of up to £1 million could be levied for failure to abide by new legislation.
It is clear that the Government and HMRC feel that public opinion is very much in their favour on this issue, and are moving to make life as difficult as possible for those who choose to indulge in artificial tax avoidance schemes. Further evidence of this came with a courtroom victory for HMRC in blocking such a scheme used by Conservative donor George Robinson, at a potential tax and national insurance cost to him and three colleagues of some £13 million. The judge in the case dismissed offshore trust arrangements as ‘cosmetic’ and characterised the scheme as featuring ‘merely money-box companies serving an essentially mechanical purpose.’ Watch this space for further developments in this key area of the modern tax system.