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The Association of Chartered Certified Accountants (ACCA) has become the latest high-profile organisation to criticise HMRC’s draft legislation Working with Tax Agents: The Next Stage.
The professional body has warned that the planned new rules covering deliberate wrongdoing could lead to accountants being unable to offer clients even the most basic tax advice.
The proposals are flawed, said the ACCA, because they define almost everyone in the financial system as a tax agent and class any tax planning, including using government incentives, as deliberate wrongdoing.
Head of taxation Chas Roy-Chowdhury said his association was concerned that ‘even revised proposals will target advisers who counsel on what HMRC call "unacceptable tax avoidance".
‘With no clear definition of what tax advice is "unacceptable", there is a strong chance that advisers will be deterred from offering tax advice, for fear of laying themselves open to fines or more critically the business-paralysing removal of all their files and papers by HMRC officers.’
Mr Roy-Chowdhury added that, while the Revenue has promised to look again at the most controversial elements of its proposals, ‘there is a very real risk the department will still want powers to fine and investigate accountants who give perfectly legal tax advice to their clients’.
Last month, the Chartered Institute of Taxation claimed the taxman’s legislation as drafted would lead to ‘absurd outcomes with innocent advisers’ – and the organisation insisted that the plans be completely rewritten.
The ACCA has called on HMRC to work with the tax profession to ensure that new powers will affect only agents involved in fraud or evasion, and not penalise those who simply take a different view from the taxman on legislation.
'The draft legislation has not been thought through,' said Chas Roy-Chowdhury. 'Any new law in this area must be focussed on tax agents who are misbehaving. It should not penalise advisers who are doing a good and valuable job in legitimately keeping their clients' tax bills down.’
