Accountants may have to stump up for clients’ tax avoidance schemes
- Credit: PA
Accountancy firms which sell tax avoidance schemes to businesses could soon face heavy financial penalties under new Government proposals.
The Treasury said accountants who help wealthy individuals and companies unlawfully exploit tax rules could be forced to pay fines of up to 100% of the tax that was underpaid.
Banks which profit from selling unlawful tax avoidance schemes could also be targeted under the proposals.
Accountants currently face little risk when selling schemes while their clients can be forced to pay penalties if successfully prosecuted by HM Revenue and Customs (HMRC) in court.
The 'Big Four' accountancy firms were attacked by the House of Commons Public Accounts Committee last year for making lucrative profits out of designing and selling ways for their clients to avoid tax.
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Committee chairwoman Margaret Hodge named PricewaterhouseCoopers (PwC) as one of the firms which were 'selling these schemes on an industrial scale'.
She also criticised HMRC for having 'too cosy' a relationship with large accountancy firms.
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Jane Ellison, the Financial Secretary to the Treasury, said: 'People who peddle tax avoidance schemes deny the country of vital tax revenue and this Government is determined to make sure they pay.
'The vast majority of their schemes don't work and can land their users in court facing large tax bills and other costs.
'These tough new sanctions will make would-be enablers think twice and in turn reduce the number of schemes on the market.'
The HMRC consultation document also makes it simpler to enforce penalties when avoidance schemes are defeated, the Treasury said.
Prime Minister Theresa May, and her predecessor David Cameron, pledged to clampdown on tax avoidance and evasion following the Panama Papers data leak in April, which revealed the offshore financial activities of individuals and companies across the world.
After the leak scandal, Mr Cameron announced that the overseas territories and crown dependencies often used as tax havens - like the British Virgin Islands and Jersey - had agreed to provide UK tax and law enforcement agencies with full access to company ownership details.
Charities have insisted the territories must go further and allow public access to registers, so they can be examined by journalists and NGOs.
Earlier this month, the all-party parliamentary group on responsible tax claimed Britain has publicly led the battle against global tax avoidance while undermining its effectiveness behind the scenes.