By:
James Slack and
Becky Barrow, 5th May 2010
Anybody who advises a friend to take out an Isa or gives them a similar tax-saving tip risks a £5,000 fine, experts warned yesterday.
They attacked proposed 'Big Brother' powers for HM Revenue and Customs which could ensnare those simply trying to help a friend,
relative or colleague to cut their tax bill.
Innocent victims could include a person who mentions to a friend in the pub that an Isa is a way of saving £10,200 a year tax-free.
Anybody who advises a friend to take out an Isa or gives them a similar tax-saving tip risks a £5,000 fine, experts are warning.
Even a vicar who encourages the congregation to donate money using the Gift Aid envelopes, rather than putting cash straight into the Sunday collection, may fall into the trap.
Charities could also be hit by the draconian new 'tax avoidance' law, experts claim.
It will make it an offence to hold any conversation - even in private, with friends - if it offers clues on how to pay less tax.
Professor Anne Redston, a tax and legal expert from King's College, London, described the proposed legislation as 'dangerous, disproportionate and an erosion of fundamental freedoms'.
She warned: 'It effectively criminalises the provision of ordinary advice on taxation by the man in the street.'
The Chartered Institute of Taxation called for the draft Bill containing the powers to be 'torn up'.
Tax policy director John Whiting said the rules are 'patently absurd' and must be rewritten - or risk turning people who are trying to
help into criminals.
The proposed rules are contained in the Tax Agents: Deliberate Wrongdoing draft Bill, which is trying to crack down on any 'tax agent' whose advice leads to a 'loss of tax' for HMRC.
It is the definition of a 'tax agent' which is fuelling much of the controversy as
it includes anybody who gives tax advice 'free of charge' and 'otherwise than in the course of business'.
This means it is not just tax professionals, such as accountants and financial advisers, but anybody who suggests ways of cutting a tax bill, even though they are completely legal.
Tax evaders such as multi-millionaires who do not pay a penny in income tax are targeted, but so is anybody who tries to make use of legal tax-saving tips.
The consequences for offering well-meaning advice such as pointing out that saving into a pension attracts tax relief could be extremely expensive, with fines of up to £5,000.
Victims could also be forced to pay a fine worth 100 per cent of the 'lost revenue' that HMRC would have got if the advice had not been followed.
Mike Warburton, of accountants Grant Thornton, said: 'This is really draconian stuff. It is Big Brother.
'It means everybody will have to tread carefully before they talk to anybody on any financial matter.'
Experts accuse HMRC of trying to grab as much tax as possible to help fill the black hole in the nation's finances.
An HMRC spokesman said: 'The draft legislation is not intended to target anyone giving fair and honest tax advice. "Deliberate wrongdoing" means the same as "fraud" or "dishonesty".
'Providing advice to clients about how they might best order their affairs, including tax planning and tax avoidance, cannot trigger
the legislation in the absence of such fraud.'
Source: href="http://www.dailymail.co.uk/news/article-1271398/Big-brother-law-threatens-innocent-advice-Tax-chat-land-5-000-fine.html">
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