Press release

Government to tighten net round ‘cowboy’ tax advisers

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Exchequer Secretary has announced Government proposals to crack down on the promoters of contrived and aggressive tax avoidance schemes.

Exchequer Secretary to the Treasury, David Gauke has today announced Government proposals to crack down on the promoters of contrived and aggressive tax avoidance schemes.

Speaking at Policy Exchange this morning, the minister unveiled plans to increase the pressure on advisers who market abusive schemes that artificially and aggressively reduce tax and to make it easier for taxpayers to identify such schemes.

The proposals include making the Disclosure of Tax Avoidance Schemes (DOTAS) rules an even stronger and more effective weapon in the battle against tax avoidance, for example by giving HMRC stronger powers to force promoters to tell them about avoidance schemes and who is using them, and tightening the rules so that it is easier to impose penalties for failure to provide information to HMRC about a scheme.

The Government is also looking at publishing warnings about tax avoidance schemes that are effectively being mis-sold and making it easier for taxpayers to identify when they are on the receiving end of a hard sell by a less reputable promoter.

David Gauke said:

Some might say that consultation documents on tax administration are an effective cure for insomnia, but this is one that will keep the promoters of aggressive tax avoidance schemes awake at night.

We are building on the work we have already done to make life difficult for those who artificially and aggressively reduce their tax bill.  These schemes damage our ability to fund public services and provide support to those who need it. They harm businesses by distorting competition. They damage public confidence. And they undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride.

The Disclosure of Tax Avoidance Schemes regime (DOTAS) has assisted HMRC greatly over the years, closing off around £12.5bn in avoidance opportunities. But as the avoidance landscape changes, so must it.  The major reforms to the system we consult on today can, informed by responses, place DOTAS once again at the forefront of anti avoidance measures globally.

Notes for editors

  1. The full speech, “Where next for tackling tax avoidance?” can be found on this website.

  2. The Government is strongly committed to tackling tax avoidance and, as part of its new approach to tax policy making set out proposals for a more strategic approach to the risk of avoidance, Tackling Tax Avoidance.

  3. At Budget 2012, the Government announced a range of anti-avoidance measures which together will bring in around £1 billion and protect a further £10 billion in future revenues from the tax avoidance ‘industry’ over the next five years.

  4. Over the past year the Government has made the following announcements of changes in tax law to counter avoidance:

    • 9 March 2011 it acted to tackle an aggressive tax avoidance scheme that depended on machinery long funding leases and aimed to claim tax relief twice on a single expenditure

    • 6 April 2011 it acted to prevent individuals from taking advantage of a tax loophole in the double taxation arrangements

    • 12 August 2011 it acted to counter a marketed avoidance scheme designed to accelerate capital allowances claims, obtaining advantageous and artificial early tax relief;

    • 15 September 2011 it acted to close a disclosed scheme using Manufactured Overseas Dividends (MODs) to get a repayment or set off on income tax that the UK Exchequer never receives;

    • 6 December 2011 it acted to block an avoidance scheme that enabled companies to enter a one-way bet against the Exchequer using foreign currency share capital;

    • 12 January 2012  it acted to counter a personal tax avoidance scheme involving post-cessation trade relief;

    • 13 March 2012 the Government acted to counter avoidance involving losses from a property business set against general income

    • Budget 2012 announced action to tackle Stamp Duty Land Tax (SDLT) avoidance

    • Budget 2012 announced action to introduce a General Anti-Avoidance Rules (GAAR).

    • 10 May 2012 it acted to counter avoidance and protect revenue to guard against potential artificial avoidance of VAT though the use of face value vouchers.

  5. Between the introduction of DOTAS in 2004 and the end of March 2012, a total of 2,289 avoidance schemes were disclosed to HMRC under the rules. This has led to over 60 changes in tax law to stop avoidance, and avoidance schemes potentially costing the country billions of pounds have been closed down.