HMRC’s consultation, entitled Strengthening Tax Avoidance Sanctions and Deterrents, proposes penalties including fines of up to 100 per cent of tax avoided as well as "naming and shaming" for tax professionals who enable clients to avoid tax through planning methods HMRC regards as "defeated". 

Under the new plans, many advisors may find themselves in an “impossible position”, said RPC, as advising that a client’s tax arrangements are legal could risk fines from HMRC if it disagreed, while refusing to advise them would risk professional negligence claims being made by clients.

The concern is that application of the legislation, if passed, would be subjective given that HMRC would have broad powers to define what is "legitimate tax planning" and what is "unacceptable tax avoidance".

The UK has made tax evasion a strict liability offence, meaning that intent is irrelevant to guilt. Such a move is, so industry practitioners say, at odds with the tradition of the English Common Law and makes lawful tax advice increasingly fraught with danger. (To see an article on the matter, see here.) Policymakers argue that without such measures, tax evasion, and forms of avoidance where there is no underlying economic activity, will continue, draining the public purse of necessary funds.

“These proposals are a very broad attack on the whole concept of tax advice, and as they currently stand, they would make it very difficult for tax professionals to offer advice at all without risking fines,” said Adam Craggs, partner and head of RPC's tax disputes team.

“HMRC’s power to define what is tax avoidance and what isn’t means that it will effectively be judge, jury and executioner when it comes to punishing those in the tax profession.”