Finance Bill 2025-26 briefing: Closing in on promoters of marketed tax avoidance

The ATT has produced a Finance Bill 2025-26 briefing on clauses 156 to 162 which introduces a new legislative framework aimed at strengthening HMRC’s ability to deter and disrupt the promotion of marketed tax avoidance arrangements.

We have significant concerns that the new prohibition is drafted in overly broad terms and risks capturing legitimate tax advisers who act reasonably, professionally and in good faith. In particular, the prohibition is triggered by an evaluative judgment as to whether arrangements have “no realistic prospect” of achieving a tax advantage, a determination that may often only be made with hindsight in areas of legal uncertainty.

The introduction of strict liability criminal sanctions, without any requirement for intent, recklessness, or dishonesty, and without a statutory defence based on reasonable professional judgment, represents a material concern for tax advisers. As drafted, the legislation risks deterring tax advisers from providing legitimate tax advice in complex or evolving areas of tax law, potentially reducing choice for taxpayers, and undermining wider economic objectives.

We are also concerned that while civil penalties allow for representations to be made, no equivalent safeguard exists in relation to criminal sanctions, despite HMRC having discretion to pursue either route. This imbalance raises issues of fairness and procedural consistency.

We therefore recommend that the legislation be refined to ensure it is appropriately targeted at deliberate and abusive promotion activity. This could be achieved by introducing a requirement that the adviser acted deliberately or recklessly, or by providing a statutory “reasonable care” defence. We also recommend aligning the procedural safeguards for civil and criminal sanctions and providing clearer statutory or guidance-based boundaries around the types of arrangements intended to fall within scope.

These changes would preserve the effectiveness of the measure against known promoters of avoidance, while ensuring proportionality, legal certainty, and continued confidence in the legitimate tax advice market.