New regulations announced by HM Revenue & Customs (HMRC) could see those providing advice on how to legitimately reduce your tax bill being fined large penalties. These new tax rules have been branded as “dangerous” by Professor Anne Redston, a tax expert at King’s College in London, according to the Daily Mail.
Professor Redston also stated that the new regulations make the distribution of advice between friends and other members of the community a criminal act, with people becoming wary of giving each other advice.
Anyone who innocently gives advice on how to pay less tax could effectively be subject to a fine of up to £5,000. Even charities could be affected by the ‘tax avoidance’ law, it has been claimed by experts.
HMRC is trying to stop tax avoidance and is clamping down on ‘tax agents’ who give advice leading to a loss of revenue for HMRC. It is the definition of ‘tax agent’ that has caused much of the controversy surrounding the new rules. As the regulations are aimed at anyone who gives advice ‘free of charge’ and ‘otherwise than in the course of business’ the regulations could impact upon innocent people who are advising friends.
People who are involved in tax evasion and deliberately avoid the payment of tax are the true targets of the regulations but it could also affect anyone who is advising someone of legal money-saving tips.
Umbrella companies will be naturally wary as they too could become targets of this policy. Although an umbrella company will provide advice that is completely in compliance with the policies of HMRC, this new guidance could cause concern.
HMRC has assured the public that it is only concerned with individuals who commit fraud and deliberately avoid the payment of tax.
