RPC argues that the proposals would place many tax advisers in an impossible position, as advising that a client’s tax arrangements were legal would risk fines from HMRC if it disagreed, while refusing to advise them would risk professional negligence claims being made by clients.

The plans are the subject of a two-month consultation, which ends today [12 October], and include a range of sanctions for accountants and tax advisers who design, market or facilitate the use of tax avoidance arrangements which are defeated by HMRC.

There is a suggestion that fines could be imposed on accountants who promote the schemes at up to 100% of the value of the unpaid tax as a result of using an aggressive, overt tax avoidance scheme, which is viewed is beyond acceptable tax planning by HMRC. They would also be ‘named and shamed’.

The firm says that if the legislation is passed as proposed, HMRC would be given extremely broad powers to define what is ‘legitimate tax planning’ and what is ‘unacceptable tax avoidance’ – making application of the regulations completely subjective.

Adam Craggs, partner and head of RPC's tax disputes team, said: ‘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.

‘The system HMRC is proposing would place advisers’ responsibilities to their clients in direct opposition to their responsibilities to the taxman, and leave lawyers, accountants and other tax specialists stuck between a rock and a hard place.’

HMRC has said it intends to adopt a penalty regime for those deemed to be enablers which is broadly the same as that relating to offshore evasion. However, unlike the offshore approach, HMRC says it proposes to use the defeat of the tax avoidance arrangements as the trigger for enabler penalties. This would mean that each enabler of that avoidance arrangement would be subject to penalties in their own right, irrespective of the final penalty position of the user of the arrangements.

RPC says HMRC will effectively become ‘judge, jury and executioner when it comes to punishing those in the tax profession’, because it will have the power to define what is tax avoidance and what is not. The firm is calling for a withdrawal of the proposals in favour of a more practical solution.

Tom Wesel, partner at Milestone, said: "These proposed rules are unworkable. The government was right to introduce fines for advisors who collude with their clients in offshore tax crimes. But threatening to fine advisors for getting their honest advice wrong is simply counterproductive and sinister.

'Increasing intimidation through ever more draconian sanctions erodes and eventually breaks the trust and consent HMRC needs in order to collect tax.

'It is naive to hope that these proposals will significantly reduce tax planning by sophisticated clients. The rules will just raise insurance premiums for advisors and drive advisory work offshore - additionally costing HMRC the tax those advisors would otherwise have paid.'

HMRC’s consultation on Strengthening Tax Avoidance Sanctions and Deterrents closes on 12 October 2016.

Essential reading

Find out more about the potential fallout from new enabler rules read Extreme behaviour: why enabler rules are excessive