Draft legislation released by HMRC to tackle fraud by tax agents has been compared with the anti-terror laws.

In its consultation document, Working with Tax Agents. The Next Stage, HMRC laid out plans for a new set of civil sanctions aimed at the minority of tax agents who are gulity of deliberate wrongdoing (DWD). Draft legislation published last week indicates that it intends to apply the new sanctions far more widely.

As a result, HMRC has created a new set of rules in which it will be an offence (punishable with a fine of £1,500 to £50,000) to give anyone tax advice (directly or indirectly) which leads to tax saving. 

The rules apply to all tax agents, but the term "tax agent" is extended and now includes anyone who gives advice for free, and so will hit charities, such as the Citizen's Advice Bureau, Tax Aid, and Chartered Institute of Taxation's (CIOT) Tax Help for Older People, and apply to other businesses outside the accounting and legal professions such as Radio and TV, newspapers, tax publishers, websites, and tax forums. The fine will be levied at individuals, and so a business could find that all its employees are fined too.

John Whiting, head of tax policy at the Chartered Institute of Taxation, says, "As I read it, you or anyone saving "invest in an ISA and save money" could technically come under the DWD rules.

Andrew Meeson, Vice President of the Association of Taxation Technicians' (ATT) says, "The parallel with “anti-terror” legislation which enables over-zealous constables to arrest tourists photographing Westminster Abbey is too striking to ignore; HMRC must not go down a similar route by painting the definition of “tax agent” far too inclusively."


As you are likely to be affected by this, respond now: HMRC's consultation Working with Agents.