Proposals for tackling ’promoters of tax avoidance’ feature strongly in the chancellor’s plans for rescuing the public finances - along with a promise that legitimate professionals have nothing to fear. Budget papers published today reveal that the government is responding to last year’s Treasury consultation on Tackling Promoters of Tax Avoidance. 'This sets out a package of measures to strengthen existing anti-avoidance regimes and tighten the rules designed to tackle promoters and enablers of tax avoidance schemes.'

Proposed changes include tougher disclosure rules, requiring information about avoidance schemes to be provided to the authorities at an earlier stage. 'This would be achieved through a proposed new information power, which would require the provision of all documents and information that relate to the arrangements or proposed arrangements in question.' However the consultation document published last July notes that promoters of tax avoidance schemes are 'rarely members of professional bodies' and the proposed changes are not aimed at such professionals. 

The red box held by Chancellor of the Exchequer, Rishi Sunak, outside number 11 Downing Street

Budget 2021: Package of measures to strengthen existing anti-avoidance regimes

Source: Dave Rushen/SOPA Images/Shutterstock

Meanwhile the budget Red Book also reveals that the government will consult on the implementation of OECD rules to combat offshore tax evasion by facilitating global exchange of information on cross-border tax arrangements.

A widely expected announcement is reform aimed at making the penalty regime for VAT and income tax self assessment fairer and more consistent. A new points-based regime will impose a financial penalty only when the relevant threshold is reached. Interest charges on late VAT payments will be aligned with other tax regimes.  

The Red Book also announces an investment of £100m in a 'Taxpayer Protection Taskforce' to combat Covid-related fraud. 

Legislation will also be introduced to ban the possession, manufacture, distribution and promotion of electronic systems which disguise transactions going through point-of-sale terminals. 

Rupert Shiers, head of tax disputes at international firm Hogan Lovells, described the proposed legislative changes as ’familiar and unsurprising’ but he said the predicted yield seems 'surprsingly high.'

'The detail will be interesting,' he added.