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As previously announced, the Chancellor continued to tighten the rules on Tax avoidance and those who promote Tax avoidance schemes.
New legislation will introduce new penalties for a person who enables another person to use a Tax avoidance arrangement that is later defeated by HMRC. It will also ensure that promoters of Tax avoidance schemes are unable to circumvent the Promoters of Tax Avoidance Scheme Regime (POTAS) by arranging their business in such a way so they do not fall in to the regime. This should allow the POTAS regime to be applied as HMRC intended when it was first introduced.
The new legislation will also remove the defence of relying on non-independent advice as taking ‘reasonable care’ when considering penalties for someone who has used a scheme.
The changes relating to reasonable care come into effect at Royal Assent and apply to inaccuracies in documents relating to Tax periods which begin on or after 6 April 2017. The penalty for enablers will apply retrospectively to enabling activity after Royal Assent.
Since 2010, HMRC has secured £140bn in additional Tax revenue through tackling avoidance, evasion and non compliance. The UK’s Tax gap remains one of the lowest in the world.
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