CIOT Condems ‘absurd’ legislation on ‘wrongdoing’
The Chartered Institute of Taxation (CIOT) is calling on the Government to tear up its proposed legislation on ‘deliberate wrongdoing’ by tax agents and start again.
In a response submitted this week to the Government’s consultation, the CIOT warns that the legislation as drafted would lead to absurd outcomes with innocent advisers and HMRC staff being held guilty of ‘deliberate wrongdoing’ and potentially subject to a £5,000 fine.
Types of situations caught would include:
· a financial adviser encouraging investment in an ISA,
· a charity asking a donor to sign a gift aid form,
· an HMRC official helping with a tax reclaim form and
· a volunteer encouraging an elderly taxpayer to claim the higher personal allowance.
John Whiting, Tax Policy Director of the CIOT, said:
“The CIOT fully recognises the need for HMRC to have appropriate powers to take action against the tiny minority of agents who are involved in deliberate wrongdoing. But these proposals go way beyond that. HMRC powers must be proportionate, properly targeted and potentially effective. The Government’s draft legislation fails all three of these criteria and needs to be completely rewritten.
“As it stands, the draft legislation applies not just to illegal actions but to any advice that could lead to a tax loss to the Treasury – such as suggesting someone take out an ISA. The definition of a ‘tax agent’ is so wide it could cover a newspaper writing a ‘Top 10 tax tips’ feature or someone offering tax advice as a friend or a welfare adviser. This is patently absurd.
“We cannot emphasise enough how strongly we feel that this legislation needs to be rethought and rewritten. The Government need to start again with these proposals.”
Notes to Editors
1) The draft legislation on ‘Deliberate wrongdoing’ was released last month for comment; it is part of HMRC’s developing project of work on ‘Working with Tax Agents’. HMRC have already extended the period of consultation from 3 March to the end of April, in response to immediate concerns raised by the tax profession.
2) The CIOT’s full response to the government consultation can be viewed at: www.tax.org.uk/showarticle. The CIOT’s response reiterates our support for HMRC having appropriate powers to tackle wrongdoers but raises key concerns including:
· The lack of data on the size of the problem HMRC are seeking powers to tackle;
· The extremely wide definition of ‘tax agent’;
· The all-encompassing definition of ‘deliberate wrongdoing’, which applies to any action in relation to tax resulting in a reduction in a tax bill;
· The ‘ex parte’ nature of the proposed hearings in relation to access to an agent’s papers (that is, holding them without the tax agent being present. NB: We understand that HMRC have accepted that the ‘ex parte’ basis is wrong and that this will be changed in the next version of the legislation); and
· The wide power to amend the legislation virtually at will by statutory instrument.
3) The Chartered Institute of Taxation (CIOT) is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities.
The CIOT’s comments and recommendations on tax issues are made solely in order to achieve its primary purpose: it is politically neutral in its work. The CIOT will seek to draw on its members’ experience in private practice, government, commerce and industry and academia to argue and explain how public policy objectives (to the extent that these are clearly stated or can be discerned) can most effectively be achieved.
The CIOT’s 15,000 members have the practising title of ‘Chartered Tax Adviser’.
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George Crozier
External Relations Manager
D: +44 (0)20 7340 0569
M: +44 (0)7740 477374
www.tax.org.uk
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