MPs call for prosecution of financial advisers that assist clients with tax avoidance

The Public Accounts Committee (PAC), which consists of a cross-party panel of MPs, has advised that the next Government should implement laws allowing for the prosecution of financial advisers that help their wealthy clients invest in aggressive tax avoidance schemes.

A call for the change has been made following a recent meeting of the PAC, a body that has also called for the next Government to review and simplify its tax relief schemes.

The committee’s announcement follows Chancellor George Osborne’s Budget 2015, which outlined rules to prosecute those advisers that assist their clients with tax evasion.

However, in a full Parliamentary report, the committee made it clear that new legislation is needed to make the promotion of aggressive tax avoidance illegal, to go further than the Government’s planned changes.

The Chair of the PAC, Margaret Hodge, stated that PwC, Ernst & Young, Deloitte and KPMG (also known as the “Big Four”), and a number of other firms, promote avoidance schemes to make money from selling ideas on how to avoid tax to their clients.

Ms Hodge said: “Some of these firms, for example PwC, from whom we took evidence, appear to be selling these schemes on an industrial scale.

“We remain concerned that HMRC’s relationship with these large accountancy firms is too cosy, and it needs to get much tougher in challenging the advice they give to their clients.

“We have also argued for new offences to penalise those involved in advising or helping companies and individuals avoid or evade tax.”

The PAC concluded its report by arguing that HMRC should increase the number of prosecutions by working more closely with the Crown Prosecution Service and other authorities.

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Nigel is the Managing Partner and Head of Litigation and Dispute Resolution in the London office of Mackrell Turner Garrett.