New legislation has been published that will give HMRC the power to fine tax advisers up to £1m for not following the tax man’s rules.

The target are tax planning businesses who help their clients to pay as little tax as possible. Another aspect is that HMRC will be able to make companies they are watching mention as such on their websites.

Monitored businesses will also have to inform all their current and prospective clients that HMRC are keeping an eye on them.

On top of that, all clients must be given a “promoter reference number”, which must be added to their tax returns before they’re sent off to HMRC. If this is not done, then the tax advisor may be liable for the £1m fine.

The proposals will also make disposing of any relevant documents a criminal offence for tax advisers.

HMRC have also made sure that accountants and lawyers who engage in the same kind of advice will be liable to the same impositions, fines and prosecutions.

Ray McCann, Partner of Pinsent Masons, said: “HMRC would like to drive the providers of tax avoidance schemes out of business and they have already had success in this area with some of the more prominent promoters of tax schemes already having shut up shop.

“£1m fines are a sudden and unprecedented escalation of the sanctions that HMRC have against promoters of tax planning schemes and again makes clear the determination of the Government to prevent abusive tax schemes.

“These rules will very publicly stigmatise these tax advisers and mean that they will struggle to win new clients and carry on in business.”

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