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Enabling Tax Avoidance: The Penalty Is The Whole Referral Fee

ended 27. August 2026

Enabler penalties sound like punishment for building an avoidance scheme. Schedule 16 to the Finance (No.2) Act 2017, which bites once a taxpayer's abusive arrangements have been defeated, is wider. On 25 August 2026 HMRC published three GAAR Advisory Panel opinions referred under that legislation. Each concerns an introducer that referred workers to an umbrella company. The umbrella paid a wage at or just above the minimum wage and accounted for PAYE and National Insurance; the introducer paid a second amount, untaxed.

Two of the Schedule's five routes to being an enabler, marketing and design, can catch someone who neither knew nor could have known the arrangements were abusive. Marketing, in the course of a business, can be as little as passing on information about a proposal with a view to the taxpayer entering into it. The penalty is not a share of the tax. It is the whole of the consideration that person received or is owed for the enabling act, and HMRC says it will only consider reducing it in exceptional circumstances.

The Panel was asked only whether the arrangements were a reasonable course of action. No penalty has been determined, and none of the companies made representations.

  1. The penalty for enabling is measured on what the enabler was paid or is owed, not on the tax at stake. Is that the right dial, or does it break the link between the punishment and the harm?
  2. Two of the five routes in, marketing and design, can catch a business that neither knew nor could have known the arrangements were abusive. Is it fair that someone who did no more than pass information on is caught by the same rule as the person who built the scheme, and who is most exposed?
  3. What should an accountant, a recruiter or an agency do now to check whether a referral fee they have taken relates to arrangements HMRC could call abusive? Do you have a client who has been paid an introducer fee for work they never questioned? If so, please give as much colour and detail as possible.

2 responses from the Newspage community

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Editor
Harvey Dhillon
Founder & CEO at Zmartly
Charging the penalty on the fee, not the tax at stake, is the right dial. But nothing in these enabler rules lets a firm earn the penalty down. Own up to a wrong tax return and HMRC must reduce the penalty. These rules contain no such reduction and no reasonable excuse defence, and HMRC's discretion to reduce or cancel has no bands, no minimum and no listed factors. One rule for the introducer and the designer is right, and I'd keep it. What isn't fair is that the firm furthest from the scheme can be last to see it coming. HMRC has traced an introducer before by asking the people who were introduced to name who introduced them. These rules only reach arrangements entered into on or after 16 November 2017: your client's signature, not your invoice. Anything you did before that date drops out too. Work back through who you introduced, to what, when they signed and when you acted. Your fee starts no clock, so an old referral doesn't go quiet just because it is old.
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Editor
Nouran Moustafa
Practice Principal & IFA at Roxton Wealth
This is where anti-avoidance law starts becoming uncomfortable. If someone designs an abusive tax scheme, fine hit them hard. But a recruiter or accountant who simply passed information on can potentially be pulled into the same regime even where they did not know, and could not reasonably have known, what they were enabling. HMRC’s own guidance confirms marketing is one of the five routes into the rules.

The penalty is also brutal: it can equal 100% of the consideration received or receivable for enabling the arrangements, not a percentage of the tax lost.

That means introducer fees can no longer be treated as harmless commission. If you refer workers, clients or contractors into tax driven arrangements, you need to understand exactly what you are referring them into.

My concern is simple: punish deliberate avoidance aggressively, but do not make ignorance irrelevant and then call every person in the chain an enabler.