Conservative MP Charlie Elphicke today put proposals before clients that could see lawyers prosecuted if they help clients with tax avoidance. The plan would prevent solicitors from providing clients with advice which serves no purpose except to act as a way of avoiding tax.
Elphicke, was formerly a tax lawyer himself and is now Conservative MP for Dover. He has tabled the proposals as amendments to the Finance Bill. Today is the final day that this bill will spend in the House of Commons as part of its public bill committee stage. Among the issues dealt with by the bill is the legal framework to facilitate a crackdown by HMRC on the use of limited liability partnerships to avoid tax through “disguised employment.”
The proposed amendments would make it an offence for a solicitor to propose arrangements to their client that “[meet] the definition of ‘tax abuse.'” The definition in question is given as “any arrangement that, having regard to all the circumstances, it would be reasonable to conclude is an arrangement that has no business, social or other purpose other than the obtaining of a tax advantage.” Those caught carrying out activities which are decided to fall within this definition could potentially face prosecution.
Another proposed clause was also floated which would provide an expansion to HMRC’s already-growing powers to combat tax avoidance. The amendment would allow the tax office to “require any person to disclose any privileged information” in certain situations.
Elphicke’s proposals have met with mixed reactions in the political and legal spheres. However, the opinion of most legal and political experts is that there is little chance that the proposals in question will ultimately be passed into law. Nonetheless, Elphicke is adamant that he wants to at least ignite debate about issues surrounding tax avoidance and its morality. In an interview with The Times, he said “We need to get to a point where, at a dinner party, if somebody tries to boast that they’ve secured millions of pounds in tax savings for a client, people don’t just smirk and think it’s funny.”
Another Tory MP, back-bencher John Redwood, has also been notable for his views on the issue of tax avoidance this year. Redwood called on politicians to build up “a concept of good and bad tax avoidance.” This, he suggested, could avert the possibility that competing measures and proposals from different parties keen to tackle the issue might turn into an “arms race.”