Treasury plans to fine financial advisers are ill-conceived
Plans to fine financial advisers for giving advice on tax avoidance have been slammed as ill-conceived by the chief executive of one of the world’s largest independent financial advisory organisations.
Nigel Green, CEO and founder of deVere Group, is speaking out after reports of the latest HMRC crackdown. Jane Ellison, financial secretary to the UK Treasury, said:
“People who peddle tax avoidance schemes deny the country of vital tax revenue and this government is determined to make sure they pay.”
She added that advisers could be fined for their part as an ‘enabler of tax avoidance.’
HMRC published a consultation paper on Wednesday setting out proposals to punish advisers found guilty of helping their clients avoid tax by issuing them with fines of up to 100% of the underpaid tax.
“Of course, we champion the idea of cracking down on illegal tax evasion and prosecuting those involved in tax evasion. Tackling it head on would be beneficial to the country’s coffers, to clients as often those dodgy schemes don’t work, and also to the financial services profession’s reputation.
“However, before a policy of fining advisers is rolled out, there would need to be clearer distinctions made from the authorities between tax avoidance, which is perfectly legal and can form a sensible part of a robust tax planning strategy, and tax evasion, which is illegal and therefore punishable under the law.
“All grey areas need to be removed and illegal loopholes closed so that everyone knows where they stand.
“If politicians, the Treasury and others, are unhappy with the system as it currently stands, it is they who need to answer questions. It is they who have the power to change the country’s tax laws and regulations, and remove grey areas and unacceptable loopholes.
“Perhaps there is indeed a need to overhaul the complex system but it is not financial advisers who can do this.
“Whilst we support efforts to tackle the serious issue of tax evasion, it is paramount that more work is done before a fining system is implemented.
“The idea that it will be punishable to be an ‘enabler of tax avoidance’ when tax avoidance is legal is surely ill-conceived.
“There is also a real danger that it will be utterly ineffective and it could mean tax evaders still get away with breaking the law unless the important preliminary clarification process takes place.”