LONDON: The U.K.’s Conservative Party has said it plans to impose “tougher regulations” on tax advisory firms, pledging to step up the fight against aggressive tax planning before next month’s general election. In its manifesto for the June 8 election, the party said it will “go further” in targeting tax evasion and avoidance and “will legislate for tougher regulation of tax advisory firms” in the U.K. The party will “take a more proactive approach to transparency and misuse of trusts,” it added. Led by Prime Minister Theresa May, the party’s announcement comes as Her Majesty’s Revenue and Customs, the U.K.’s tax authority, aims to raise an additional 5 billion pounds ($6.5 billion) a year by 2020 through tackling abusive tax arrangements, aggressive planning, and tax system imbalances. John Cullinane, policy director of the U.K.’s Chartered Institute of Taxation (CIOT), said the proposal may relate to a measure initially included in the 2017 Finance Bill—which targeted “enablers” of tax avoidance—that the government subsequently dropped due to the snap election’s timing. Imposing a 100 percent fine of the unpaid tax in question on professionals who have advised on avoidance schemes, this measure was “already expected to reappear” after the election, he told Bloomberg BNA in a May 18 email. If the proposal “is anything else, we have no details of it.”
George Bull, a London-based senior tax partner at accounting firm RSM, said the Conservative Party’s proposed crackdown on advisory firms may apply to tax professionals working “outside traditional regulatory bodies,” such as CIOT or the Institute of Chartered Accountants in England and Wales. The party “clearly have something up their sleeve,” he told Bloomberg BNA in a May 18 telephone interview. “HMRC doesn’t want to duplicate the regulatory bodies that already exist, but there may be questions on whether unregulated professionals ought to be brought within a regulatory regime.” In November 2016, the U.K.’s tax advisers received a warning against encouraging or engaging with tax avoidance schemes under new guidelines from the country’s top tax and accountancy bodies. Tax advisers must not create, encourage or promote tax strategies that achieve results contrary to the intention of U.K. tax laws or seek to exploit loopholes within existing legislation, the U.K.’s seven leading tax and accounting bodies said in a Nov. 1 statement on the updated tax adviser code.
