Rogue tax advisors: policy paper

Some of the most abusive tax avoidance is actually a criminal offence, in that advisers sometimes dishonestly recommend a scheme which they know is not actually legally effective. 

In principle, because of the element of dishonesty, the criminal offence of cheating the public revenue is being committed. It is impossible in practice to prosecute in such cases, however, because the adviser can claim (however implausibly, in the case of really aggressive avoidance) that they genuinely believed the scheme was going to work. 

Fortunately, there already exists on the statute books a test to discern precisely when this claim is so implausible that it cannot be believed, and that is the so-called "double reasonableness" test in the General Anti-Abuse Rule.

We have therefore published a policy paper proposing a statutory intervention enabling HMRC to treat the double reasonableness test as equivalent to the test for dishonesty in a prosecution for the criminal offence of cheating the public revenue. 

The purpose behind the proposal is not to criminalise tax advisers, but to dissuade those who might otherwise be tempted from putting their names to "too good to be true" tax schemes. 

A panel event to discuss this proposal, featuring Jane McCormick, former Global Head of Tax at KPMG; Jesse Norman, Financial Secretary to the Treasury; and George Turner from TaxWatch UK, will take place on 12 November 2020 at 11 a.m.