16th May 2017
Last December the UK tax office confirmed it was going to tackle an issue at the root of tax evasion within the country. It revealed that it would now be able to fine and sanction financial advisers and other professionals found guilty of facilitating tax avoidance and evasion.
Advisers under fire
The sanctions are expected to go live after the general election on 8th June and the EU has now announced it will follow the UK’s lead after publishing a consultation paper last year discussing whether it should introduce a ‘mandatory disclosure scheme’ which would require financial advisers and accountants to flag schemes that facilitated evasion. However, according to recent reports, Pierre Moscovici – the EU taxation commissioner – prefers a ‘hard law’ approach of fines and sanctions over less stringent measures like a code of conduct.
“The proposal we will make will have three pillars. They include a scope that covers all intermediaries, all harmful practices and all jurisdiction”, Moscovici revealed. “These experts offer their clients their opportunity to aggressively exploit loopholes or to shift their profits so as to substantially reduce their tax bill.”
The new rulings in both the UK and EU follow on from the Panama Papers leak of more than 11 million documents which revealed how individuals and organisations around the world use shell companies to hide their wealth from their governments.
However, despite Moscovici’s suggestions, many feel it’s still likely that the EU will follow the UK’s lead and adopt the “soft law” approach which would be considerably easier to implement. It’s also likely that there will be a need for an additional regulatory layer for advisers who are either not professionally qualified or not governed by a professional body.
Regardless of the severity of the approach taken by the EU, this move is yet another added to the global fight against tax evasion making it harder for both individuals and the agencies placing them to get away with attempting to cheat the system. With punishments ramping up as a result of the increasingly uncompromising approach adopted by governments all over the world – and the introduction of the Common Reporting Standard – it’s simply not worth the risk of trying to get away with evasion wherever you’re operating. If you’re at all unsure of your status when placing experts in foreign countries then get in contact with the experts who can ensure you remain on the right side of the law.