Companies that let their staff help tax cheats will face criminal prosecution under a new law.
Prime Minister David Cameron has announced that for the first time, tax advisers and other financial intermediaries who give advice about aggressive tax avoidance will face fines and jail.
The measure is part of a campaign by the government aimed at stamping out offshore tax avoidance following the stark revelations of the scale of the problem in the Panama Papers.
The announcement comes after Cameron has fended off a week of criticism about his personal tax affairs after news leaked that his father had set up an offshore trust.
Cameron is also keen to deflect any bad publicity about tax avoidance as he chairs the London Anti-Corruption Summit in May.
Unfairly accused
The summit will bring together government, business and thought leaders to tackle corruption by seeking to remove the secrecy around global financial transactions.
The criminal offence for companies with staff aiding tax avoidance has some critics, including Nigel Green of one of the world’s leading financial advice firms deVere Group, which has more than 80,000 clients in 100 countries.
Green feels that many tax advisers are unfairly accused of aiding companies and wealthy individuals avoid tax when they are working within the law and that the government would be better off changing the rules rather than prosecuting the people help their clients legally arrange their finances to pay less tax.
“Let me make it clear that I do not support tax evasion. Tax evasion is a crime and anyone involved should face the full force of the law,” said Green.
Lawmakers made the problem
“However governments created this tax avoidance problem and lawmakers should be looking at closing down the opportunities they have given people to legally pay less tax if they don’t want them to take the opportunities.
“Tax avoidance is legal. David Cameron and just about everyone else does it. Sheltering money in an ISA to avoid capital gains tax on the increase in value of shares is tax avoidance.
“Prosecuting intermediaries seems unfair. It’s blaming someone else for something that is the government’s fault and then failing to sort out the cause of the problem.”
