The Society for Trust and Estate Practitioners has urged the Government not to make advisers shy away from legitimate tax planning.

Advisers have been warned they could face large fines under new plans to crack down on tax avoidance.

Under the plans set out in an HMRC consultation document issued last week, enablers of tax avoidance could have to pay a fine of up to 100 per cent of the tax the scheme’s user underpaid.

The Treasury listed “accountants, tax planners and advisers” in its announcement regarding who might be hit with the tougher penalties.

STEP said the proposed sanctions for enablers of tax avoidance must be carefully targeted.

The latest proposals from HMRC follow similar proposals to tackle enablers of offshore evasion.

STEP said, however, that in moving the focus from ‘evasion’ to ‘avoidance’ the authorities must take care to distinguish between legitimate tax planning and the sort of highly artificial schemes no reputable tax advisor would wish to be associated with.

George Hodgson, STEP’s interim chief executive, said: “Many tax advisors would argue that one of the most effective ways of tackling such activity would be to simplify the tax system, removing the complexity which some try to exploit.

“The absence of any real progress on tax simplification is therefore disappointing.

“The focus instead on pursuing advisors may prompt many to shy away from advising on the allowances and reliefs that Parliament has created to encourage particular forms of activity.”

Mr Hodgson said: “While the broad aims of these proposals command wide support, the proposed measures should only implicate those involved in the sort of activities that few professionals would seek to defend.”

Currently tax avoiders face significant financial costs when HMRC defeats them in court. However, those who advised on, or facilitated, the avoidance bear little risk, officials stated.

The Government said it is acting to make sure that tax avoidance is “rooted out at source and this action will target all those in the supply chain of tax avoidance arrangements”.