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'Cowboy' tax scheme firms 'to disclose client lists' 'Cowboy' tax scheme firms 'to disclose client lists'
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The government is promising to force "cowboy" financial firms to disclose the names of people using "aggressive" tax avoidance schemes.The government is promising to force "cowboy" financial firms to disclose the names of people using "aggressive" tax avoidance schemes.
Treasury minister David Gauke said such products were "repugnant" and unfairly penalised ordinary taxpayers.Treasury minister David Gauke said such products were "repugnant" and unfairly penalised ordinary taxpayers.
The proposal is part of a government consultation on curbing avoidance.The proposal is part of a government consultation on curbing avoidance.
Last month Prime Minister David Cameron condemned the use by comedian Jimmy Carr of a Jersey-based scheme as "morally wrong".Last month Prime Minister David Cameron condemned the use by comedian Jimmy Carr of a Jersey-based scheme as "morally wrong".
That was one of a number of high-profile cases of people using financial loopholes to legally avoid large tax bills.That was one of a number of high-profile cases of people using financial loopholes to legally avoid large tax bills.
The Treasury estimates that 14% of all unpaid tax income is due to aggressive avoidance schemes, which are not illegal but are deemed unfairly to deprive the government of income.The Treasury estimates that 14% of all unpaid tax income is due to aggressive avoidance schemes, which are not illegal but are deemed unfairly to deprive the government of income.
The proposals include:The proposals include:
  • Measures to make finance companies disclose details of wealthy clients who take advantage of such schemes
  • Firms having to disclose how all their tax avoidance schemes work, not just the ones for which they are being criticised
  • Publishing warnings about tax avoidance schemes that are effectively being mis-sold, to make it easier for taxpayers to identify when they are on the receiving end of a hard sell by a disreputable promoter
  • Measures to make finance companies disclose details of wealthy clients who take advantage of such schemes
  • Firms having to disclose how all their tax avoidance schemes work, not just the ones for which they are being criticised
  • Publishing warnings about tax avoidance schemes that are effectively being mis-sold, to make it easier for taxpayers to identify when they are on the receiving end of a hard sell by a disreputable promoter
They comes alongside plans to legislate to curb tax avoidance through a general anti-avoidance rule.They comes alongside plans to legislate to curb tax avoidance through a general anti-avoidance rule.
Companies could face fines of more than £1m if they flout the new rules.Companies could face fines of more than £1m if they flout the new rules.
Don't expect a list of avoiders to be pinned up on the door of your local tax office.Don't expect a list of avoiders to be pinned up on the door of your local tax office.
These proposals are aimed at giving HM Revenue and Customs more detail on the individuals using tax avoidance schemes, not as a public shaming exercise.These proposals are aimed at giving HM Revenue and Customs more detail on the individuals using tax avoidance schemes, not as a public shaming exercise.
The tax authority will not publish people's confidential tax affairs.The tax authority will not publish people's confidential tax affairs.
It already receives a register - often populated by tax agents and company names using these legal schemes.It already receives a register - often populated by tax agents and company names using these legal schemes.
But, under these plans, HMRC will have a clearer sight of who it is dealing with if it decides to wrestle with the most "aggressive" schemes.But, under these plans, HMRC will have a clearer sight of who it is dealing with if it decides to wrestle with the most "aggressive" schemes.
Mr Gauke acknowledged that tax avoidance - which is legal, unlike tax evasion - was difficult to define, adding that there was "always a barrier to be put up between unfairness and clarity".Mr Gauke acknowledged that tax avoidance - which is legal, unlike tax evasion - was difficult to define, adding that there was "always a barrier to be put up between unfairness and clarity".
He defined "aggressive" schemes as those which are "contrived" to defy the will of Parliament by depriving the government of expected revenues. He promised to "strengthen our description" of what constitutes tax avoidance to make schemes easier to control.He defined "aggressive" schemes as those which are "contrived" to defy the will of Parliament by depriving the government of expected revenues. He promised to "strengthen our description" of what constitutes tax avoidance to make schemes easier to control.
In a speech to the Policy Exchange think tank, Mr Gauke said HM Revenue and Customs already had an "excellent compliance record", adding: "We are building on the work we have already done to make life difficult for those who artificially and aggressively reduce their tax bill.In a speech to the Policy Exchange think tank, Mr Gauke said HM Revenue and Customs already had an "excellent compliance record", adding: "We are building on the work we have already done to make life difficult for those who artificially and aggressively reduce their tax bill.
"These schemes damage our ability to fund public services and provide support to those who need it. They harm businesses by distorting competition. They damage public confidence."These schemes damage our ability to fund public services and provide support to those who need it. They harm businesses by distorting competition. They damage public confidence.
"And they undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride.""And they undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride."
In a column for the Times newspaper, Mr Gauke wrote: "Legitimate use of reliefs, for example taking out a tax-free ISA, is not avoidance. Buying a house for personal use through a company to avoid stamp duty, on the other hand, clearly is.
"Morally repugnant practices such as this are where the government is cracking down."
He promised to deal with "cowboy advisers", who devise and sell schemes to divert money away from the Exchequer.He promised to deal with "cowboy advisers", who devise and sell schemes to divert money away from the Exchequer.
Mr Gauke told the BBC News Channel: "This is a message to people who might be tempted by an unfair tax avoidance scheme: if something looks too good to be true, it probably is too good to be true.
"It's unfair because other taxpayers are having to pay more as a consequence... We want to nip it in the bud and ensure that people don't get engaged in aggressive tax avoidance schemes."
Mr Carr last month confirmed making a "terrible error of judgement" after it emerged he used a complex scheme to reduce his tax bill.Mr Carr last month confirmed making a "terrible error of judgement" after it emerged he used a complex scheme to reduce his tax bill.