Treasury to double max sentences for tax avoidance and create a new criminal offence
The Treasury is proposing to double maximum sentences for the most egregious cases of fraud from 7 to 14 years to crack down on tax fraud and deter criminal actions, it was reported today.
The Treasury is introducing tougher measures on promoters of tax avoidance, through draft legislation that will create a new criminal offence that will apply to promoters of tax avoidance schemes who fail to comply with a HMRC legal notice requiring them to stop promoting an avoidance scheme.
The government is also publishing draft legislation which will enable HMRC to apply to the court for a disqualification order against directors of companies involved in promoting tax avoidance.
Commenting on today’s announcement, Crawford Temple, CEO of Professional Passport, an independent assessor of payment intermediary compliance, said:
“Whilst we welcome any measures to prevent and deter tax avoidance, it has become apparent to me that HMRC is not naming any companies on their ‘Stop Notice list’* which means that those companies can continue to pedal criminal schemes and get away with it.
“Doubling the prison sentences will not serve to deter these criminals who are arrogant enough to think they will never get caught, particularly at the speed with which HMRC operates.
“I have said it before and I will continue to say it, enforcement is key and HMRC has all the data it needs to catch the perpetrators but they need to proactively tap into that data as a matter of urgency to quickly identify them, close them down and stamp out tax avoidance once and for all.”
The latest legislative announcement follows a report by The Freelance Informer detailing the ICAEW’s Tax Faculty proposing safeguards for directors of alleged tax avoidance schemes in response to HMRC’s latest proposals that would allow a criminal offence to be applied where promoters fail to comply with a stop notice and directors are disqualified.
In its response to the HMRC’s consultation, ICAEW’s Tax Faculty expressed a concern that persons could be found guilty of the proposed criminal offence even where the stop notice is subsequently overturned. It, therefore, has suggested a safeguard designed to prevent this outcome.
Read the report here.