Taxman to rethink 'deliberate wrongdoing' law

HM Revenue and Customs has announced it will extend a consultation on legislation to clampdown on 'deliberate wrongdoing' by tax advisers, much to the relief of accountants.



The draft legislation has been criticised for appearing to apply not only to illegal actions, but also to any guidance from a tax advisor that could lead to a tax loss to the Treasury.



If passed without amendment, advisors warned that the legislation, due to its wording, could result in consequences for them for recommending legitimate actions, such as opening an ISA.



It could have also hit journalists, as the law is currently framed to apply to anyone offering such advice, so the writer and publisher of a 'Top 10 tax tips' piece could, theoretically, break the law.



Seeming to recognise the concern, HMRC said consultation on the draft legislation would now run until April 28, putting the introduction of any resulting legislation beyond the current parliamentary session.



Welcoming the decision, Andrew Hubbard, president of the Chartered Institute of Taxation, said HMRC had been quick to respond to concerns over the scope of the legislation.



"We fully support HMRC having a power to deal effectively with the very small number of agents who are involved in what amounts to fraud in relation to a client's tax liabilities, but the legislation as drafted went far wider than this."



"In our opinion, it would have been unworkable and would have created a very damaging rift between HMRC and tax advisers."



CIOT added it was right that any request to a tax tribunal for access to working papers of an advisor accused of 'deliberate wrongdoing' should be made at a hearing which the advisor has the right to attend.



"The interest of justice would not have been served," Mr Hubbard said, "had the proposal to deny [tax] agents the right to be represented been implemented."