Advisers engaged in legitimate tax planning have nothing to fear from HM Treasury’s proposed rules on avoidance, a spokesman from HM Revenue & Customs has said.
New proposals published this week could mean advisers have to pay a penalty of up to 100 per cent of the tax owed to HMRC.
The move would affect advisers, tax planners and accountants involved in schemes - including those offshore - which are proven in court to be a tax avoidance arrangement.
But some advisers have raised concerns about tax avoidance falling into a “grey area” between evasion and planning.
A spokesman for HMRC moved to dispel these concerns, saying those who sell or promote tax avoidance schemes “love” to conflate it with tax planning to sow doubt and confusion.
He said “there is no way” use of an Isa or inheritance tax planning could ever be considered avoidance.
The spokesman said: “Tax avoidance is bending the rules of the tax system to gain a tax advantage that parliament never intended.
“It often involves contrived, artificial transactions that serve little or no purpose other than to produce a tax advantage. It involves operating within the letter – but not the spirit – of the law.
“Tax avoidance is not the same as tax planning,” he clarified.
He described tax planning as “using tax reliefs for the purpose for which they were intended”.
For example, claiming tax relief on capital investment, saving in a tax-exempt Isa or saving for retirement by making contributions to a pension scheme are all legitimate forms of tax planning.
“While such actions may reduce the total amount of tax paid, they are not tax avoidance, because they involve using tax reliefs in the way that Parliament intended when it passed the relevant legislation.”
The spokesman added that HMRC would only pursue an adviser for a fine after a tribunal had ruled in its favour.
