Criminal prosecutions of dodgy tax advisers: QC’s opinion supports our policy

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We are currently seeking a policy change which is to do with criminal prosecution of promoters and enablers of abusive tax schemes. The problem we have identified is that prosecuting these bad actors under existing law is almost impossible because of an evidential snag.

Criminal prosecutions of promoters and enablers of abusive tax schemes require proof of dishonesty. In the context of egregious tax avoidance, it is too easy for the promoters and enablers of these schemes to fend off allegations of dishonesty by claiming it was within the range of reasonable expert opinion to believe that the scheme they were promoting would work. Often this claim is transparently unconvincing to experts, but would very likely be enough to make a prosecuting authority decline to place the matter before a jury.

Our proposed legislative intervention is intended to get around this evidential problem. Given that there already exists an established statutory test to determine whether a scheme was within the range of reasonable expert opinion, i.e. the test in the General Anti-Abuse Rule, we propose that that test be applied to the assist in determinations of criminal liability in prosecutions of tax avoidance enablers.

We proposed this intervention in a policy paper published in collaboration with the Policy Institute at King's College London. That paper was discussed at a panel event where the Rt Hon Jesse Norman MP spoke in his then capacity as Financial Secretary to the Treasury. We also tabled an amendment intended to bring the matter to debate in the House, and again the then Minister responded.

On both occasions concerns of legal principle and fundamental justice were raised in relation to the proposal. Would this measure risk criminalising the innocent? Does this measure create a strict liability offence i.e. one without a ‘mens rea’ or mental element? Does this measure water down the requirement to prove guilt beyond reasonable doubt? What about rule of law, human rights, the right to a fair trial and so on?

We are now publishing a follow-up paper in which we address those concerns. In preparing the paper we obtained advice of Justin Rouse QC, a senior barrister specialising in criminal law, and his advice is reflected in the analysis the paper provides. Broadly, counsel confirmed that the proposed legislation may be enacted without substantive concerns of the kind suggested above. He agreed with us that the hypothetical scenarios in which the measure might result in some kind of unjust prosecution were "inherently unlikely" and advised that the practical effect of the measure will "simply be to enable prosecutions of dishonest advisers that would otherwise be very difficult for evidential reasons".

We therefore remain convinced that this measure is sound, and will continue to pursue its implementation at every opportunity.