Promoters of unacceptable tax avoidance schemes will face having their assets frozen until penalties are paid under proposals in the small print of today’s budget and spending review. 

Under the headline ’Clamping down on promoters of tax avoidance’, HM Treasury’s red book document states that: ’The government will legislate in Finance Bill 2021-22 for further measures to clamp down on promoters of tax avoidance.

According to the statement, the package of measures, which will take effect following Royal Assent, will:

  • Allow HMRC to freeze a promoter’s assets so that the penalties they are liable for are paid
  • Deter offshore promoters by introducing a new penalty on the UK entities that support them
  • Provide for the closing down of companies and partnerships that promote tax avoidance schemes, and
  • Support taxpayers to steer clear of avoidance schemes or exit avoidance quickly, by sharing more information on promoters and their schemes. 

The announcement is the latest in a series of moves against so-called 'promoters of tax avoidance', including the duty to inform the authorities at an early stage of any new schemes.

Meanwhile, the Finance Bill 2021-22 will contain a measure to reform income tax basis periods so businesses’ profit or loss for a tax year will be the profit or loss arising in the tax year itself, regardless of its accounting date. The transition to the new rules will take place in 2023-24 and the new rules will come into force from 6 April 2024.