From 1 January 2017, tough sanctions have come into force for lawyers and other advisers – like accountants or bankers – who enable tax evasion. They’ll face fines of up to 100% of the total tax they helped evade or £3,000 – whichever is the highest. The government will now also be able to publicly name the culprits. The UK is one of the first countries in the world to introduce this power.
The regime has been designed to capture those who enable avoidance, rather than those who provide second opinion advice to clients on arrangements designed or enabled by others.
Financial Secretary to the Treasury, Jane Ellison, has said, ‘closer to home, we are creating a tax system where taxes are fair, competitive and paid. The raft of measures we have introduced to tackle avoidance and evasion will create a level playing field for the clear majority of people and businesses who play fair and pay what is due.’
This year will also see the government introduce a new corporate criminal offence of failing to prevent the facilitation of tax evasion, as a part of the Criminal Finances Bill. Companies will be held liable if an individual acting on its behalf, as an employee or contractor, facilitates tax evasion (currently there needs to be proof that the board of directors were aware of and involved in facilitating the evasion).
Furthermore, there will be the introduction of a new requirement to correct past tax evasion as part of the Finance Bill. This Bill aims to catch anyone who has failed to correct past evaded taxes by 30 September 2018, hitting them with tough new penalties.
2017 marks a large push by the government and HMRC to crack down on tax evasion. It will be worth watching to see how the Bills develop and whether the sanctions become any tougher in the bid to make tax evasion more difficult for all involved.