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Taxman to crack down on promoters of bogus schemes

The taxman says it’s going to start throwing the book at promoters of bogus schemes that turn out to be tax avoidance by fining them into submission.

Her Majesty’s Revenue & Customs says that thanks to new regulations that give it the authority to go after tax avoidance, any promoter it identifies as using a ‘high-risk’ arrangement needs to reveal to any of its clients that the tax authority is breathing down its neck. Not only that, but if any of these firms don’t comply with the conditions of the monitoring they could end up with massive fines as high as £1 million – and that their identities will be publicised by HMRC as well.

For what it’s worth, I think a scheme like this – which combines the old ‘name and shame’ with a massive fine – is likely to be highly effevtive. Paying off the government for your sins is one thing – sure, smaller, less successful promoters might be suitably terrified of such a fine because it may shutter them, but larger ones could easily weather such a financial hit – but if a promoter loses its reputation as being trustworthy it’s not exactly going to have clients beating down its door to invest with them.

Of course there’s also the massive benefit this would have for individuals looking for ways to manage their tax liabilities legally without being put at risk of committing tax avoidance. Not everyone can afford an entire division of accountants working for them day and night to find each and every last loophole possible, which is why so many people rely on promoters to do the work for them – and if you can’t trust your promoter to be on the up and up then who can you trust?

The new initiative could give people looking for a valid tax arrangement some peace of mind if they know their chosen promoter isn’t in the doghouse for shoddy business practices because they use a high-risk scheme. Better safe than sorry I say – and when it comes to tens of thousands pounds in tax liability – or even much, much more – being very safe is much better than being very, very sorry. Nobody wants to be that contrite, trust me.

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