Solicitors who advise clients on legal financial strategies that have no purpose other than to create a tax advantage could face prosecution under proposals to be floated in parliament by a Conservative MP tomorrow.
Charlie Elphicke, MP for Dover and a former tax lawyer, has tabled amendments to the Finance Bill that would create a summary offence to propose an arrangement ‘which meets the definition of “tax abuse"’.
This, in turn, is defined as ‘any arrangement that, having regard to all the circumstances, it would be reasonable to conclude is an arrangement that has no business, social or other purpose other than the obtaining of a tax advantage’.
Another clause would entitle HMRC in certain circumstances to ‘require any person to disclose any privileged information’.
The MP’s amendments have little chance of becoming law. However he told today’s The Times that he wants to start a debate about the morality of tax avoidance.
‘We need to get to a point where, at a dinner party, if somebody tries to boast that they’ve secured millions of pounds in tax savings for a client, people don’t just smirk and think it’s funny,’ he said.
Elphicke’s back-bench colleague the Tory grandee John Redwood earlier this year called on the political classes to develop ‘a concept of good and bad tax avoidance’ to avoid an ‘arms race’ of competing measures against avoidance.
The Finance Bill, which among its measures includes legal backing to HMRC’s clampdown on tax avoidance through ‘disguised employment’ by limited liability partnerships, will go through the final day of the public bill committee stage in the House of Commons tomorrow.
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