A group of cross-party MPs have called on the UK government to begin cracking down on the accountants and financial advisors that facilitate tax avoidance schemes according to City A.M.
In a new report, the all-party parliamentary group (APPG) on anti-corruption and responsible tax called for the UK’s tax system to be overhauled, to boost growth, increase tax revenues, and restore trust in the system. Tory MP Kevin Hollinrake called for a greater focus on “enforcement” as he pointed to Treasury Select Committee figures showing every £1 spent on enforcement collects £26 in extra revenue.
The MP said the UK should “spend more on prosecutions, particularly of advisors” as he argued “enablers” of tax avoidance schemes should be subject to greater scrutiny. Hollinrake argued advisors play a major part in facilitating tax avoidance as the former businessman recounted that “some years ago, once our business started making decent profits, it was our accountants that suggested we should consider a tax avoidance scheme.”
Our experience here at IWORK mirrors that of Hollinrake. We know that most contractors who end up in a tax avoidance scheme are encouraged by the suggestion of seemingly trustworthy advisors. If they had never received the suggestion, they would not find themselves owing tax at a later date. However, there is something to be said for those advisors who point out the risks and enable an informed decision to be made. Much worse are those who encourage people into schemes without any explanation and deliberately duping people out of their hard earned cash in extortionate fees, and later these same people find themselves with an eye-watering tax bill – as happened to many loan charge victims.
Hollinrake noted that few advisors are ever prosecuted, due to a reluctance – on the part of HM Revenues and Customs (HMRC) and the Treasury – to pursue accountants and other professionals through the courts. This is certainly the case in our experience of the Loan Charge where HMRC has aggressively pursued innocent victims caught up in schemes rather than the scheme promoters themselves. Hopefully this powerful group of MPs will galvanise the government into taking some action.