22/05/17

UK leader commits to adviser clampdown over tax avoidance

In the party’s 8 June election manifesto, unveiled last week, British prime minister Theresa May said if she is re-elected she will “go further” in targeting tax evasion and avoidance and “will legislate for tougher regulation of tax advisory firms” in the UK, reports International Adviser.

“We have taken vigorous action against tax avoidance and evasion, closing the tax gap – the difference between the amount of tax due and the amount collected – to one of the lowest in the world.

“We will now go further. We will legislate for tougher regulation of tax advisory firms. We will take a more proactive approach to transparency and misuse of trusts,” read the manifesto.

Adviser fines

It comes as HM Revenue and Customs (HMRC) said it aims to raise an addition £5bn a year by 2020 by tackling abusive tax arrangements, aggressive planning, and tax system imbalances.

The manifesto pledge may refer to HMRC plans to issue hefty fines to financial advisers and other professional found guilty of helping their clients avoid tax.

The measure was initially included in the 2017 Finance Bill and given the green light last December but subsequently dropped by the UK government after the snap election was called.

Setting out a clear definition, the tax office said ‘enablers of tax avoidance’ include independent financial advisers, tax accountants and others “who earn fees and commissions” in marketing tax avoidance schemes, even if their activities do not promote such arrangements.

Beneficial ownership

May promised a tougher crackdown on tax avoidance and evasion following the 'Panama Papers' leak last April.

In the same month, the tax authority also revealed it will increase penalties on anyone who has not paid outstanding taxes from offshore investments ahead of the start of a new data sharing agreement with the crown dependencies and territories, which went live last October.

Last year, the UK became the first country to introduce a public beneficial ownership register, forcing company owners to provide details such as their name, date of birth and nationality.

However, while it applies to UK companies, the public register omits Britain’s crown dependencies and overseas territories, including the British Virgin Islands, Jersey, and the Cayman Islands, which have so far resisted the move.

Earlier this year, UK lawmakers rejected an amendment that would have introduced public a beneficial ownership register for companies in the crown dependencies, namely Jersey and Guernsey.

Meanwhile, Britain’s opposition Labour Party has unveiled its strategy for tackling tax avoidance, if it is elected into government on 8 June. This includes proposals to review trusts and introduce a public register of trust assets and beneficiaries as well as introducing a tax on property held in overseas trusts.