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Accountancy: Tax Avoidance

Volume 470: debated on Thursday 17 January 2008

To ask the Secretary of State for Business, Enterprise and Regulatory Reform what powers he has to investigate the affairs of accountancy firms which have been found to be selling tax avoidance schemes which have been declared unlawful by tax tribunals. (178522)

I have been asked to reply

The Government are committed to protecting the tax system against tax avoidance and ensuring that all taxpayers pay their fair share of tax.

The Tax Avoidance Disclosure regime means that those selling avoidance schemes have a direct obligation to provide information about (“disclose”) a scheme to HMRC if it falls within certain descriptions. The Finance Act 2007 gave HMRC new powers to inquire into a promoter it reasonably suspects of failing to disclose a scheme if required

Aside from this, HMRC’s powers in relation to third parties (including those who sell avoidance schemes) are generally restricted to collecting information relating to the tax payable by the individual or corporate taxpayer. Powers to inquire into the affairs of an agent are generally restricted to instances of criminal behaviour by the agent.

It is not illegal to sell tax avoidance schemes, whether or not they are successful in their aim of avoiding tax.