HMRC published a consultation on proposals it put forward to strengthen sanctions and deterrents for enablers of tax avoidance schemes.

The intention is to further decrease tax avoidance by creating disincentives for those promoting schemes or benefiting from others’ avoidance of tax. Currently, people who introduce users to the avoidance, or facilitate its implementation, bear limited risk or downside when such arrangements are defeated by HMRC.

HMRC proposed to broadly define the word enabler, encompassing more than just those who design, promote and market avoidance – including anyone in the supply chain who benefits from an end user implementing tax avoidance arrangements and without whom the arrangements as designed could not be implemented. However, it also provides safeguards for those who are within that definition but are unaware that the services they provide are connected to wider tax avoidance arrangements. It is also clear that the measure is designed specifically to deal with tax avoidance which HMRC defeats and is not dependent on the users of arrangements being charged penalties in individual cases.

This consultation has now closed. In December 2016, the Government published a summary of responses document. The following proposals were taken forward:

• the introduction of a penalty for those who design, sell or otherwise enable the use of tax avoidance arrangements which are defeated by HMRC
• the removal of the defence of having relied on non-independent advice as evidence of taking “reasonable care” when considering penalties for taxpayers who use such avoidance schemes which HMRC defeats