As part of the Government’s efforts to put an end to tax avoidance, new rules and possible penalties have been announced in order to punish promoters of high risk tax schemes.
The Promoters of Tax Avoidance Schemes (POTAS) legislation was first introduced in the Finance Act 2014 and permits HMRC to serve conduct notices, which demand a change in professional behaviour, to those they believe to be promoting high risk schemes.
Now, if a promoter fails to comply with the conduct notice’s terms, they risk being issued with a stricter monitoring notice, which will result in repercussions such as having to inform their clients that they are being monitored.
The promoter will also face wider exposure by being publicly named by HMRC.
Following the recent announcement of the new regulations in Parliament last week, HMRC has already issued one conduct notice to a promoter and ongoing monitoring is set to result in more notices being served.
Promoters who are being monitored will be required to disclose their monitored status on any publications or business correspondence (including that with current and prospective clients, intermediaries, professional bodies, and regulatory authorities), with clearly legible declarations on business documents.
David Gauke, financial secretary to the Treasury, said: “Our tough new rules will force high risk promoters to change their behaviour and help protect taxpayers from unscrupulous advice.”
The new rules could potentially result in fines of up to £1mn being served to promoters that do not comply with the conditions of a monitoring notice.