Government commits to do more to tackle promoters of tax avoidance schemes

The Financial Secretary to the Treasury has written to the Chairs of the Economic Affairs Committee and its Finance Bill Sub-Committee to update them on further steps from HMRC to modernise tax administration and combat avoidance.

In his letter, Jesse Norman MP, told Lord Forsyth of Drumlean and Lord Bridges of Headley that the Government plans to consult on further steps to tackle promoters of tax avoidance schemes. This will include proposals to help disrupt their business model, tackle secrecy and ensure promoters face financial consequences for promoting tax avoidance, as well as giving HMRC more powers to shut down these promoters.

This follows a public evidence session with the Sub-Committee on 2 November when the Financial Secretary was questioned on the need for tougher steps to be taken in this area.

This session formed part of the Sub-Committee’s inquiry into the draft Finance Bill 2020-21, which includes some existing proposals to crack down on tax avoidance promoters.

The Financial Secretary has also said that plans for new measures on ‘uncertain tax treatments’, which had also been included in the draft Finance Bill, have now been delayed until 2022. This follows criticism from witnesses to the Sub-Committee’s inquiry that the measures were unclear and would be difficult to implement.

Lord Bridges of Headley, Chair of the Economic Affairs Finance Bill Sub-Committee, said:

“It’s welcome news that the Government plans further tough measures against promoters of tax avoidance schemes. Our Sub-Committee will continue its inquiry into the plans set out in the draft Finance Bill, but it is clear that more must be done to shut down this activity, which preys on unsuspecting taxpayers and hurts the Government’s revenue base.

“I also applaud the Government’s decision to delay its measures on uncertain tax treatments. Our Sub-Committee heard concerns that these plans were poorly thought through and confusing, and a rethink is clearly needed."

In his letter to the Chairs, the Financial Secretary also informed them of the launch of a consultation into extending the “Making Tax Digital” initiative to Corporation Tax.

Read the Financial Secretary’s letter.

The Financial Secretary to the Treasury will be giving evidence to the Economic Affairs Committee from 3pm on Tuesday 17 November 2020 in the final session of its inquiry on the employment consequences of the COVID-19 pandemic. The session will be streamed on Parliament TV.