HMRC issues new guidance: what you need to know

HMRC has issued guidance on the new Prohibition of Promotion (POP) regime contained in Part 6 of the Finance Act 2026, highlighting the significant penalties that can apply to those who promote certain tax avoidance arrangements.

What is the POP regime?

The POP regime prohibits a person from promoting arrangements that have been, or are likely to be, marketed as a means by which a person may seek a particular tax advantage if there is no realistic prospect that the arrangements will result in the tax advantage. It also empowers HMRC to extend the prohibition to certain specified arrangements through regulations.

When does the POP regime apply?

The POP regime can apply where a person, in the course of business or with a view to monetary gain, promotes tax avoidance arrangements in the circumstances outlined above.

'Arrangements' include any agreement, scheme, arrangement or understanding of any kind.  

The definition of 'promotion' is broad, and means:

• communicating information with a view to encouraging another person to implement the arrangements or part of the arrangements;
• making the arrangements available for implementation by another person;
• in circumstances where the arrangements have been implemented by another person, organising or managing any aspect of the arrangements; or
• arranging (whether directly or indirectly) for another person or persons to take the steps set out above.

Significant sanctions

The consequences of breaching the POP regime are significant and include both criminal and civil sanctions.

A person who promotes arrangements in breach of the prohibition commits a criminal offence and is potentially liable to an unlimited fine and/or up to two years’ imprisonment.

A breach can also result in a civil penalty of up to £1 million, together with a further £5,000 for each person who participated in the arrangements.

When determining the penalty, HMRC will consider factors including:

• the number of people involved;
• the amount of tax at risk;
• the level of cooperation with HMRC; and
• whether the behaviour was repeated or continued over an extended period.

Significantly, individuals responsible for the actions of a company or partnership may also face personal liability.

What does this mean for you?

The POP regime marks a further expansion of HMRC’s already extensive powers to tackle tax avoidance, and enables HMRC to impose significant sanctions on  those promoting tax avoidance arrangements. Businesses and individuals should expect HMRC to use these powers as part of its continuing focus on those it considers to be involved in promoting certain tax avoidance arrangements.

The POP rules are particularly relevant to anyone involved in designing, marketing, recommending or managing tax avoidance arrangements. Businesses and professional advisers should therefore take care to ensure that any tax planning arrangements they promote or make available are properly reviewed and do not fall within the scope of the prohibited arrangements.

If HMRC alleges a breach of the POP regime or seeks to impose a penalty, its position should be considered carefully. There are opportunities to challenge HMRC’s allegations, make representations before a civil penalty is imposed and appeal against any penalty imposed or its amount. Taking appropriate specialist advice at an early stage can help preserve evidence, protect your rights and put you in the strongest position to defend your conduct and challenge HMRC’s conclusions.

If you would like to discuss how the POP rules might apply to you, please get in touch with us - early advice can help minimise exposure and enable an effective response to be provided to HMRC.