HMRC has unveiled sweeping new powers to tackle tax advisors that facilitate non-compliance among their clients’ tax affairs.

Announcing the new measures, James Murray MP, Exchequer Secretary to the Treasury, said they would enable swifter and stronger action and "ensure there is no place for bad actor business models" in the UK tax advice market.

The government plans to:

• Expand the penalty criteria for tax advisers
• Strengthen information-gathering powers
• Broaden public disclosure requirements
• Impose stricter penalties for non-compliance.

According to HMRC estimates, the UK tax gap stood at 4.8% of theoretical liabilities or £39.8 billion in the 2022-23 tax year.

Ian Anfield, managing director of Hudson Contract said: “The government has already announced plans to clamp down on umbrella companies and is now consulting on other types of employment-related tax avoidance.

“All the signals suggest liability is being passed up the chain – to the users of tax avoidance schemes, rogue payroll companies, and so-called commercial contractors. This could be a huge problem for those construction firms who have chosen to use commercial contractors because along with payroll they offer gimmicks such as cash-back and rewards points on credit cards rather than picking their provider based on due diligence or legal standing.

“With potential penalties for advisers tied to lost revenue and the threat of public naming and shaming, construction firms should urgently review their relationships with tax advisers and payroll providers to ensure they aren't unknowingly exposing themselves to huge compliance risks.”

Hudson is the only provider of its kind with case law in its name, giving clients the confidence and legal backing to engage self-employed operatives compliantly.

• HMRC is consulting on enhancing its powers until May 7th.
• Construction Enquirer quoted Hudson as a leading authority in its coverage of the clampdown. Read the article here.