The Law Society of England and Wales has responded to a consultation by HMRC on strengthening tax avoidance sanctions and deterrents, in which HMRC sought comment on proposals to increase their ability to target those who HMRC considered to be ‘enabling’ aggressive tax avoidance.

The Law Society of England and Wales expressed concern that punishing solicitors for giving honest advice on complex legal questions only hampers their ability to give any advice in the first place, increasing the risk taxpayers may unwittingly enter into unacceptable tax avoidance schemes. This is the very opposite of what we understand HMRC is trying to achieve.

The Law Society of England and Wales also objected to proposals to reverse the burden of proof in some cases, requiring the taxpayer or adviser to prove they took ‘reasonable care’ with their tax arrangements if they are challenged, as a lawyer would not be able to defend themselves without the client’s consent to waive the protections of legal professional privilege. No client should feel pressured to do so, and no penalty regime should rely on an assumption that clients will waive privilege.