This morning the Daily Mail has covered a very worrying story about changes to the law which effectively make it a criminal act to dispense tax advice. The woman behind the story - Anne Redston, a Visiting Professor in tax law at King’s College London - has written the following blogpost exclusively for Big Brother Watch.
Have you ever suggested an ISA might be a good investment, helped an elderly relative reclaim overpaid tax, or been encouraged to use gift aid? This sort of advice could soon cost you £1,500 or more.
HM Revenue and Customs have drafted new laws penalising ‘deliberate wrongdoing’ - but this isn’t about hiding money in foreign bank accounts.
Instead, ‘deliberate wrongdoing’ is defined as an act capable of causing a ‘loss of tax.’ This in turn is defined as ‘relief, reduction, repayment or credit of any kind.’ These definitions mean that any advice on saving tax could be subject to a penalty.
The maximum penalty is 100% of the tax ‘lost’, but with minimum £5,000 (reduced to £1,500 if you confess your wrongdoing to HMRC before they discover about it). There is also a ceiling of £50,000 - but this is per person, per tax, per year, so it could be much higher.
The draft law also makes it clear that these new rules apply to everyone, although lawyers and journalists have special protection. Of course, this legislation will be particularly tough on those whose day job involves giving tax advice, such as accountants and financial advisers.
And for them there is extra punishment - HMRC can take away all their client files - not just those files relating to the ‘wrongdoing’ - but all files, from all clients, including former clients.
Is this necessary?
Very definitely not! The taxman already has a huge armoury of legal powers to investigate genuine tax offences.
Although HMRC may say it will only use the powers ‘reasonably’ or ‘proportionately’, once a government body has such draconian powers, the temptation to use them is overwhelming. The taxman already deploys the anti-terrorism powers in the Regulation of Investigatory Powers Act (RIPA) over 5,000 times a year. And councils are using the same powers to check your rubbish bins.
You can find the draft rules by going on to the HMRC site (www.hmrc.gov.uk) and searching under ‘draft legislation and deliberate wrongdoing’ and then reading from page 11. It is too late to respond formally but you could still try sending your comments to HMRC at: firstname.lastname@example.org.
And of course, you could ask your (prospective) MP to oppose these new extreme powers. I hope you will.