If you’ve ever given advice to your friends and family about tax matters, you might be interested in the views of one of the UK’s leading tax experts.
Anne Redston, from King’s College in London recently spoke to the Daily Mail about ‘dangerous’ tax rules that could see people facing fines of up to £5,000 by HMRC. For example, you may be subject to a fine for something as simple as advising a friend to save money in a tax free Isa.
However, HMRC claims that the legislation is intended to wipe out fraud and not to target people giving fair advice.
The CIT is calling for the Bill, which is currently in draft format, to be torn up. John Whiting, tax policy director, said that the rules have to be rewritten or we face the risk of turning helpful people into criminals.
The main problem with the bill is the definition of a ‘tax agent’. The term includes all people who give out tax advice, including umbrella companies, regardless of whether the advice is free or in the course of business.
In addition to the £5,000 fine, people could face a penalty of 100% of the monies HMRC had lost from somebody who followed the tax advice.
It’s not only the Tax Agents: Deliberate Wrongdoing Bill that is causing concern for taxpayers at present. The majority of SMEs believe that our tax system is too complicated. In fact, 77% of businesses surveyed in a recent study by Sage UK Omnibus felt that the current tax regulations stopped them benefitting from tax allowances and breaks. The tax system is also seen as a barrier for people planning to start-up a business.
UK SMEs are confused when it comes to taxation. With small businesses still struggling to show profits after the recession, an understanding of the tax benefits and breaks available could be the deciding factor in staying afloat.
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