Advisers have hit back at new rules requiring them to warn clients with offshore accounts about the government crackdown on tax avoidance.
The proposed legislation, published in documents alongside the Budget, requires financial intermediaries to notify their UK-resident customers with UK or overseas accounts about the Common Reporting Standard.
Revenue & Customs stated advisers would also have to warn their clients with offshore investments about the penalties for evasion and the opportunities to disclose.
Last year the UK and various overseas jurisdictions agreed to adopt the new reporting standards on financial account information. Overseas tax avoidance has made headlines following the investigation into HSBC over Swiss bank accounts.
Advisers were quick to question why they should have to do the tax office’s work for them.
Paul Richardson, managing director of surrey-based Concept Financial Planning, said he was happy to write to his clients on behalf of Revenue & Customs, but added he would hope to be paid for his services.
He said: “Given that Revenue & Customs will soon be having online accounts for all taxpayers, the tax collectors would be better off putting up a warning online and scaring those with offshore accounts that way.”
Alongside dragging advisers into attempts to increase its tax take, the government also announced it is to introduce legislation that would include tougher measures for those who persistently enter into tax-avoidance schemes.
These rules will include a special reporting requirement and a surcharge on individuals whose latest tax return is inaccurate as a result of a further failed avoidance scheme.
The government will look to restrict access to reliefs for individuals identified as having a record of trying to abuse them through avoidance schemes that do not work.
Additionally, Revenue & Customs stated that it intends to develop further measures to name those who continue to use schemes that fail.
Legislation will also be introduced in the forthcoming Finance Bill to widen the current scope of the Promoters of Tax Avoidance Schemes regime, by including promoters whose schemes regularly fail.
Also buried in the official Budget Report was the news that the various facilities currently available to disclose tax irregularities will all close early, at the end of 2015 rather than during 2016.
Adviser view
John Cassidy, tax investigation partner for national tax-planning firm Crowe Clark Whitehill, said: “Anyone with something to declare needs to do so quickly. The new disclosure facility is to be based on penalties of at least 30 per cent of the tax due, with no immunity from prosecution, whereas the current Liechtenstein Disclosure Facility provides for penalties as low as 10 per cent and a guarantee of no prosecution. Those wishing to come forward now have less time to avail themselves of these more beneficial terms”
