Monday, February 22, 2010
HM Revenue and Customs (HMRC) has extended its consultation on draft legislation on tax agents to April 28, following an urgent meeting with the Institute of Chartered Accountants of England and Wales and the Chartered Institute of Taxation over concerns regarding the scope of malpractice provisions.
The deadline on HMRC’s “Working with Tax Agents: the next stage” consultation, though, remains unchanged, and ends on March 3.
Industry experts had raised fears that the draft proposals on dealing with rogue advisors are too wide-ranging, and could penalize anyone who gives tax advice – regardless of who they are. They argue that the proposals as they currently stand could apply to, for example, a member of the public offering someone else tax advice, or a newspaper offering top tax tips. Independent financial advisors who offer inheritance tax advice, with the aim of reducing the client’s tax liability, are afraid they could also fall into the net.
HMRC has emphasized, however, that the draft rules are aimed at dishonest and fraudulent tax advisors. “Tax agents play a vital role in the delivery of the tax system and the overwhelming majority advise their clients appropriately,” an HMRC spokesman said.
Under the new rules, tax advice that leads to a tax loss as a result of deliberate wrongdoing could result in a penalty of between GBP1,500 and GBP50,000. It is estimated that around GBP25m is lost each year through such malpractice.