ACCOUNTANTS and lawyers who face spot fines of £5,000 and penalties of £600 a day for failing to disclose tax avoidance schemes have lambasted the Treasury for spreading confusion among professional advisers.
The Finance Bill, which was published yesterday, detailed Gordon Brown’s plans to enforce the clampdown on tax avoidance that he announced in the Budget.
Under the proposed new rules, firms must register tax shelter schemes with the Inland Revenue before they are sold to companies or individuals, or they will be fined. Taxpayers will have to include this registration number on their tax returns or they will also pay penalties.
The Treasury hopes the disclosure requirements will enable it to shut immediately the increasingly aggressive avoidance plans that are reputedly costing it billions of pounds a year. Last year, hundreds of rich people were able to pay virtually no tax after being sold an elaborate scheme involving government bonds. Although the loophole was closed quickly, the loss of revenue to the Treasury was substantial.
However, professional firms claim that the Treasury has still not given an adequate definition of what constitutes an avoidance scheme.
Many professional firms are worried that advice that they consider to be normal tax planning could be caught under the new rules.
Edward Troup, partner in Simmons & Simmons, the City law firm, said: “This Bill is a complete cop-out. On the basis that these rules have been prescribed, the Treasury can designate anything it wants as a tax shelter.”
Although the new rules will not be written into law until August, they will be backdated to March 18 when they were first announced.