HMRC plans to introduce a tax avoidance criminal offence risks overreach, the
Chartered Institute of Taxation (CIOT) has warned.
HMRC plans to create a new strict liability criminal offence for failing to
disclose notifiable arrangements under the Disclosure of Tax Avoidance Schemes
(DOTAS) regime without a reasonable excuse.
The CIOT argues that DOTAS is much too wide in its current formulation to be
suitable for a criminal offence. Applying the proposed offence to all the DOTAS
hallmarks seems excessive, it adds.
This is especially true, since the proposal is intended to be a response to
specific issues with disguised remuneration mass-marketed tax avoidance schemes,
the CIOT warns.
John Barnett, CIOT's Vice President, said:
'The government is right to be taking a robust approach to those who continue to
devise, promote or sell mass-marketed tax avoidance schemes. There should be no
place for such people and their schemes in the tax services market.
'However, every proposal to increase HMRC's powers like this needs to be tested
against a hypothetical test of what would happen if an HMRC officer decides to
use or target the legislation inappropriately.
'The present proposal places too high a level of reliance on HMRC's unpublished
(and as such, not transparent) internal governance process to provide
appropriate, independent safeguards and work effectively, so that such an
outcome could never happen in practice.
'It is essential for building and maintaining trust in the tax system that the
way HMRC use their powers and operate safeguards can be effectively monitored
and subjected to appropriate oversight.'
Internet link: CIOT