ICAEW has said it is concerned that new proposals from HMRC designed to crack down on the promoters of dubious tax avoidance schemes are not sufficiently targeted, and risk increasing the compliance burdens and costs for tax advisors across the board without addressing the central problem.
The institute's comments were made in the Tax Faculty's submission to a recent consultation, Raising the stakes on tax avoidance which closed earlier this month. The ICAEW says that while it supports 'reasonable and proportionate' measures by the government to tackle tax avoidance, it is worried that the options under consideration could impose 'undue and unreasonable' burdens on the vast majority of tax advisers who are not involved in such activity.
ICAEW says that only about 20 promoters are the focus of the new proposals, and claims that many of these firms operate outside of any oversight by a professional body, while several are based outside the UK.
In its response, the Tax Faculty says: 'The danger then is that the proposals will not succeed. The 20 or so promoters at whom the measures are aimed continue to operate in exactly the same way as they do now but considerable extra compliance costs have been imposed on everyone else to no useful purpose.'
The ICAEW also says that any proposal to take action against individual promoters should only be carried out after the proposal has been subject to some form of independent scrutiny, similar to the Advisory Panel under the recently introduced General Anti-Abuse Rule (GAAR).
The response states: 'It is not acceptable for HMRC to act as judge and jury in what is a highly sensitive area, particularly given that the measures appear to be too widely targeted.'