BEIS White Paper on Audit Reform: Will Kwarteng's reforms really unchain entrepreneurs?
The Government has long had an aim of making the UK a hostile environment for those that are found to have evaded or avoided their tax responsibilities. In the Autumn Statement of 2016 (apparently the last such statement of its kind), the Chancellor continues this trend with a range of announcements to tackle tax evasion and avoidance.
Perhaps the most significant announcement is the Chancellor’s confirmation that he will introduce a “new penalty for any person who has enabled another person or business to use a tax avoidance arrangement that is later defeated by HMRC”. This announcement had been foreshadowed by the Treasury in the 2016 Budget and was the subject of a consultation earlier this year. The Treasury promise that the new regime will reflect the responses submitted as part of this consultation and that draft legislation will be published shortly.
Other announcements include:
Tax practitioners are (understandably) likely to be anxious about the confirmation by the Chancellor that he will introduce a penalty for enablers of tax avoidance arrangements that are later defeated by HMRC. Given the ambiguity in much tax legislation, and thus the potential for ‘legitimate’ tax planning to become, in HMRC’s views, ‘illegitimate’, this new penalty regime could be applied very broadly. It will therefore be of great interest to see how the legislation is drafted and, equally importantly, how HMRC will police its use of this new provision. Recent experience suggests an aggressive approach is likely to be adopted.
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