ACCA welcomes the opportunity to respond to HMRC’s Open consultation: Closing in on promoters of tax avoidance. We support the government’s intent to identify, and further disrupt, the avenues that the ever decreasing minority of determined promoters of tax avoidance utilise to promote such schemes. Before introducing additional powers we think it is important to establish whether existing powers could be better used, eg through better funding of properly trained and resourced teams, and whether other options, such as taxpayer education, might be as effective in reducing avoidance at lower cost.

Safeguards to protect those who might fall within the scope of the powers but not be the intended target are an essential design feature. Ensuring that the initial powers are as carefully scoped as possible will reduce the need for complex safeguards, which can in addition act as a means for determined wrongdoers to delay or frustrate HMRC’s enforcement efforts if abused. Before addressing each question listed in the consultation document, ACCA makes the following suggestions. We then proceed to comment on the four key proposal areas.

• ACCA encourages HMRC to examine its existing powers and whether they are sufficiently utilised. Proposals must seen in relation to the wider ecosystem; in this case, the combined effect on existing DOTAS and POTAS legislation.
• Accelerating collection of tax should not be at the expense of judicial process. Measures such as ‘Universal Stop Notices’ need to be carefully considered and the case for (and against) clearly explained in order to help build trust in HMRC’s processes.
• The more tightly defined the scope of the legislation and process, the lower the likelihood of unintended consequences. The interaction with other legislation and offences must be considered at every stage of the process.
• In the absence of effective practical mechanisms to prevent unqualified and unaccountable individuals from promoting harmful tax avoidance schemes, public understanding of the difference between good, bad, and illegal tax advice plays a vital role in reducing the attractiveness or viability of such schemes.
• Building public trust in tax in tax authorities is a complex blend of encouraging and engaging the compliant majority while visibly pursuing wrongdoers. Open and frank communication about the challenges of dealing with a tiny determined minority will improve wider understanding of the risks of engaging with promoters of tax avoidance schemes and give an opportunity for HMRC to emphasise the safeguards which protect those who intend to pay the right amount of tax at the right time.

To read our response in full, please download the consultation response document found on this page.