Chancellor continues clampdown on tax cheats

New anti-tax avoidance measures, including a crackdown on “enablers”, are forecast to raise £820 million for Treasury coffers.

Announcing four pledges in his Budget, Chancellor Philip Hammond said the government will aim to: enact a tough new financial penalty for professionals who enable a tax avoidance arrangement that is later defeated by HMRC; stop businesses from converting capital losses into trading losses; tackle abuse of foreign pension schemes, and introduce UK VAT on roaming telecoms services outside the EU, “in line with international standard practice”.

Hammond said the government has secured £140 billion in additional tax revenues since 2010 by taking action to tackle “avoidance, evasion, and non-compliance”.

However, the Office for Budget Responsibility assigned a “high” level of uncertainty to the new proposal clamping down on enablers.

It said: “This measure receives a ‘high’ uncertainty ranking. As with most avoidance measures, estimating the current amount of tax lost and predicting the behavioural response of individuals that are already changing their behaviour to avoid paying tax is hugely uncertain.

“Modelling was also considered to be a ‘high’ uncertainty as it depends on a projection of future avoidance.”

Kate Ison, senior associate at law firm Berwin Leighton Paisner, welcomed the move, but called on the Chancellor to ensure people are not restricted from receiving tax planning advice.

She said: “The government has confirmed that it intends to introduce the new penalty regime for enablers of avoidance schemes that are later defeated in court with effect from July.

“This is to be welcomed in relation to abusive and aggressive schemes.”

She added: “We hope that appropriate safeguards are included in the final legislation to ensure that taxpayers are not restricted from accessing independent, professional advice in relation to mainstream commercial tax issues and generally accepted tax planning.”

Commenting on the efforts to tackle avoidance, evasion and non-compliance, Chas Roy-chowdhury, head of tax at professional body the Association of Chartered Certified Accountants, said: “This sounds like a good measure in theory, but there is an existing Professional Conduct in Relation to Tax code of conduct.

“Tax professionals who are subject to this existing code, which has been developed in conjunction with HMRC, should not be subject to this new measure.”