Legislation for tax avoidance promoters “toothless” for those operating overseas, warns ATT
New measures to target those involved in designing and promoting tax avoidance schemes may be powerless to stop those operating through offshore entities, the Association of Taxation Technicians (ATT) has warned.
Responding1 to draft legislation2 on proposals to close in on promoters of marketed tax avoidance, the ATT also spoke out about the introduction of a strict liability criminal offence, meaning that a person or business can be found guilty solely by having committed the act, regardless of their intention or awareness.
The legislation proposes a raft of measures to address those involved in the creation and promotion of tax avoidance schemes, including enhanced information notices and the issuing of Universal Stop Notices (USNs) to promoters of marketed tax avoidance. However, it is unclear how these can be applied in practice to promoters outside the UK.
Jon Stride, chair of the ATT’s Technical Steering Group, said:
“We recognise that there is no place in society for those involved in the creation, promotion, and sale of tax avoidance schemes that do not comply with the letter or spirit of the law. However, while the introduction of USNs may deter onshore promoters, we question whether these additional powers will impact the full range of promoters, and they could be toothless for those operating through offshore entities.
“We also have significant concerns regarding the introduction of criminal sanctions in the draft legislation, specifically that the proposed strict liability offences are neither proportionate nor appropriate in the context of tax compliance. Drafting a criminal liability offence too broadly risks capturing legitimate professional activity and could distort the tax advice market. Advisers may be deterred from offering legitimate services if they perceive an undue risk of exposure to criminal liability, even where there is no intent to promote avoidance.
“We back the introduction of anti-avoidance information notices and measures to hold the ‘controlling minds’ behind tax avoidance schemes to account. But we urge the Government to pursue enhanced international collaboration, bilateral agreements, and the development of more robust cross-border enforcement mechanisms, to address the 20 to 30 currently active promoter organisations operating with structures involving offshore jurisdiction.”
Notes for editors:
- ATT response: Closing in on promoters of marketed tax avoidance.
- Policy paper: Closing in on promoters of marketed tax avoidance.