24/10/22

UK: MPs call for crackdown on advisors enabling tax avoidance schemes.

As published on cityam.com, Monday 24 October, 2022.

A group of cross-party MPs have called on the UK government to begin cracking down on the accountants and financial advisors that facilitate tax avoidance schemes.

In a new report, the all-party parliamentary group (APPG) on anti-corruption and responsible tax called for the UK’s tax system to be overhauled, to boost growth, increase tax revenues, and restore trust in the system.

Tory MP Kevin Hollinrake called for a greater focus on “enforcement” as he pointed to Treasury Select Committee figures showing every £1 spent on enforcement collects £26 in extra revenue.

The MP said the UK should “spend more on prosecutions, particularly of advisors” as he argued “enablers” of tax avoidance schemes should be subject to greater scrutiny.

Hollinrake argued advisors play a major part in facilitating tax avoidance as the former businessman recounted that “some years ago, once our business started making decent profits, it was our accountants that suggested we should consider a tax avoidance scheme.”

He noted that few advisors are ever prosecuted, due to a reluctance – on the part of HM Revenues and Customs (HMRC) and the Treasury – to pursue accountants and other professionals through the courts.

At the same time, Hollinrake noted that those few advisors who have been sanctioned by HMRC for tax fraud are still able to practice as tax advisors as there is no licensing body for those advising on tax affairs.

Labour MP Margaret Hodge argued the UK’s tax system “acts in favour of taxpayers who can afford to pay advisers that can help them avoid paying a fair share,” as she suggested “any person or company that attempts to dodge paying… should be met with the full force of the law.”

Hollinrake argued that multinationals that avoid paying UK taxes undermine trust in the system, as he suggested this lack of trust could begin to stifle Britain’s growth.

The MP said that if small businesspeople “lose faith in the system through a belief that the game is rigged in
favour of the big guys, then they won’t even bother in the first place.”