The UK government has said that failure to comply with a Potas (promoters of tax avoidance schemes) stop notice is to become a criminal offence.
In a consultation paper published on 27 April, the government also announced its proposal to expedite the disqualification of directors of companies involved in the promotion of tax avoidance.
Additionally, HM Revenue & Customs (HMRC) reported that as a result of its actions taken to date, the amount of revenue lost to marketed tax avoidance has fallen from an estimated £1.5bn ($1.9bn, €1.7bn) in the tax year 2005-2006, to £400m in the tax year 2020-21.
Since 2016, more than 20 people have been convicted for offences relating to tax evasion or fraud, where the arrangements have been promoted or marketed as tax avoidance.
The government said that while many promoters have now left the avoidance market, it plans “to take persistent action to deter, disrupt and frustrate promoters of tax avoidance”.
‘Determined group of promoters’
The government emphasised that the proposals “do not target legitimate tax advisers and taxpayers.”
Victoria Atkins, financial secretary to the Treasury, said: “They are targeted at a determined group of promoters who profit by attempting to sidestep the rules – often leaving taxpayers with significant tax bills.”
HMRC has published the details of 27 promoters and 31 tax-avoidance schemes, to support taxpayers to make “informed choices” and “steer clear of or exit tax avoidance”.
Since 17 February, 10 promoters have received stop notices, which require them to stop promoting a specified scheme or schemes similar to the specified scheme.
A clear message
Civil penalties that can be charged for failure to comply with a stop notice, range from £5,000 for each failure to provide HMRC with information in a quarterly return, up to £1m for continuing to promote arrangements in the stop notice.
Commenting on its move to further deter people ignoring a stop notice, the UK government said: “The message is a clear one: under these proposals, if a promoter continues to promote a scheme covered by a stop notice, they will be committing a criminal offence and could face prosecution.”
The consultation runs until 22 June 2023 and the outcome will be published later in the year.
