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HMRC extend ‘deliberate wrongdoing’ consultation

A storm has broken out in the normally tranquil world of accountancy and taxation over recent months following the HM Revenue and Customs’ (HMRC’s) Revenue’s release of their 'draft legislation on deliberate wrongdoing by tax agents'. The draft reflects and is meant to be considered alongside the consultation paper ‘Working with Tax Agents: The Next Stage’, which was published in December.

Among the many criticisms that have been made of the draft legislation is that it appears to apply not just to illegal actions, but to any advice that could lead to a tax loss to the Treasury. HMRC have declared ‘total warfare’ on the country’s tax agents, veteran chartered accountant Chris Try told the Taxation website. '‘I have read the document, and it constitutes a Pearl Harbor moment for all tax agents in the UK; 8 February 2010 is a day of infamy,” said Mr Try. “The taxpayers’ charter is dead. Working Together is dead. The [draft legislation] is a declaration of unrestricted, total warfare against all of those who make the UK tax system work,” he added.

The problem seems to be the interpretation of the legislation meaning that any form of tax advice (for example even the suggestion that someone take out an ISA) that denies HMRC tax income would be illegal. Anyone offering such input such as a friend, a colleague, a financial advisor or even a journalist sharing their 'top tax efficiency tips' would in effect become a criminal.

HMRC seem to be aware of the disquiet and have extended the consultation period on the draft legislation until April 28th, which would extend any subsequent legislation into the next Parliament.

The Chartered Institute of Taxation (CIOT) President Andrew Hubbard, said, “We are pleased to note that HMRC have moved quickly to respond to the concerns which we raised about the draft legislation.”

The feeling amongst many in the industry including qualified chartered and certified accountants is that in principle HMRC are right to expect only suitably qualified people to deal with serious tax issues and that agents need to be properly qualified and accredited. But they also feel that HMRC is using a sledgehammer to crack this particular nut.


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