Consultation: Clamping down on promoters of tax avoidance

The Promoters of Tax Avoidance Schemes (POTAS) rules were introduced by Finance Act 2014 with the aim of changing the behaviour of promoters of tax avoidance schemes and deterring the development and use of such schemes. The government has decided that whilst these rules are robust there is more to be done.

The current consultation follows an HMRC policy paper and earlier Consultation in July 2020 which has lead to draft legislation being included in Finance Bill 2021 and allows HMRC to:

• Issue stop notices to promoters earlier by changing the notice conditions.
• Challenge the individuals behind corporate promoters to stop them avoiding the POTAS rules.
• Use Schedule 36 powers to obtain information about enablers of schemes.
• Ensure penalties can be issued and enablers named without delay.

The government is now seeking views on a range of proposed additional measures targeted at the most persistent promoters of tax avoidance and including:

• Clamping down on promoters who hide their assets, by ensuring HMRC have the power to ring-fence the assets to pay any relevant penalties, such as by requiring upfront security payments or issuing asset freezing orders with sanctions for non-compliance.
• Tackling offshore promoters through their UK associates, whether they are connected or not, by making the UK entities liable for penalties linked to the offshore promoter’s business.
• Closing down companies involved in promoting or enabling tax avoidance and disqualifying the directors, where certain conditions are met. This would include where it has been shown they are not operating in the public interest, such as where there has been a significant breach of the anti-avoidance legislation.
• Supporting taxpayers to steer clear of or get out of tax avoidance schemes by informing them of HMRC’s enquiries into specific promoters and schemes and ensuring that they better understand whether the information they have been provided with by their promoter accurately reflects the information held by HMRC.

Responses to the consultation should be sent to This email address is being protected from spambots. You need JavaScript enabled to view it.. The closing date is 1 June 2021.

Useful guides on this topic

Promoters of Tax Avoidance Schemes (POTAS)
Who is a Promoter? What are the Promoters of Tax Avoidance Scheme rules?  What does this mean for promoters, intermediaries and clients?

DOTAS: Disclosure of tax avoidance schemes
What are rules on Disclosure of tax avoidance schemes (DOTAS)? When should you disclose your use of a tax avoidance scheme? What are the consequences of non-disclosure? How are penalties calculated?

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Consultation: Clamping down on promoters of tax avoidance 

Summary of key consultation questions

Clamping down on promoters who dissipate or hide assets to avoid paying penalties

Q4. Do you agree with the principle of requiring a security payment or obtaining an asset freezing order in the circumstances described?

Q7. Is the High Court or Upper Tribunal the appropriate court for seeking either a security or asset freezing order, or would another court be more appropriate?

Q10. Are there any other safeguards that HMRC should consider, to ensure the proposed power is only used in appropriate cases?

Tackling offshore promoters and the UK entities that support them 

Q13. Do you agree that UK entities who are unconnected with the offshore promoter for tax purposes, as outlined in paragraph 3.15, should be included within the scope of this proposal? 

Q19. Do you agree that UK entities who are liable to the additional penalty for facilitating offshore arrangements should be subject to a security or asset freezing order where there is a risk that assets will be dissipated before the penalty was paid? 

Q20. Do you consider that the proposed approach outlined in this chapter would be an effective deterrent to UK entities facilitating, or contemplating facilitating offshore promoters’ activities?

Q22. Do these safeguards strike the right balance between tackling overseas promoters and fairness towards their UK associates who become liable to a charge under these proposals? 

Closing down companies that promote tax avoidance schemes and tackling the directors of those companies

Q23. Where there is a significant breach of the anti-avoidance regimes and it is in the public interest to do so, do you agree that HMRC can act to present a winding-up petition to the court?

Q24. Do you agree that a company’s significant breach of the anti-avoidance rules warrants consideration by INSS for disqualification of the company’s directors?

Q29. Do you agree that there should be a new ground for director disqualification for promoters involved in tax avoidance?

Supporting taxpayers to identify and steer clear or exit tax avoidance

Q32. If HMRC were to have the power to publish the name (and details) of schemes and the relevant promoters when certain conditions are met, how helpful would this information be to taxpayers?

Q33. How can HMRC ensure that taxpayers do not incorrectly assume that if a promoter or scheme was not on the list then they cannot be involved in tax avoidance?

Q34. To what extent would information of the sort described here help taxpayers understand the risk of entering into tax avoidance?

Q36. Do you agree that a 30 day period strikes the right balance between giving promoters sufficient time to make representations and ensuring that taxpayers can be informed quickly?