Accountants and financial advisers that help clients avoid paying tax could end up being fined 100% of the total value of the loss to the Treasury, under new rules proposed by the government.
The rules shift the burden of paying penalties for wrongfully avoiding tax from the client to the adviser, in an attempt to “root out” tax avoidance at the source of the problem, the Treasury said.
Currently, clients are only fined if the loopholes they use are successfully challenged in court and generally without penalties for the tax advisor.
“The vast majority of their schemes don’t work and can land their users in court facing large tax bills and other costs,” Jane Ellison, financial secretary to the Treasury, said.
“These tough new sanctions will make would-be enablers think twice and in turn reduce the number of schemes on the market,” Ellison said.
In July, Prime Minister Theresa May pledged to crack down on aggressive tax avoidance, saying “tax is the price we pay for living in a civilised society.”
“It doesn’t matter to me whether you’re Amazon, Google or Starbucks, you have a duty to put something back, you have a debt to fellow citizens and you have a responsibility to pay your taxes,” May said.
Earlier this year, the Panama Papers investigation cast a spotlight on the use of offshore trusts to avoid tax. Over 11 million documents held by the Panama-based law firm Mossack Fonseca were leaked to the German newspaper Süddeutsche Zeitung, which shared the information with the ICIJ, an organisation made up of 107 media companies in 78 countries.
The database of 200,000 companies, trusts, foundations, and funds incorporated in 21 countries is information about where many of the world’s largest banks legally shelter cash for rich people.
The details of the investigation claimed the scalp of Spanish acting industry minister Jose Manuel Soria and Icelandic Prime Minister Sigmundur David Gunnlaugsson — each of whom stepped down because of activities exposed by the Panama Papers documents.
Business Insider Emails & Alerts
Site highlights each day to your inbox.