City partners have criticised government proposals to fine advisers involved in helping clients avoid tax.

The consultation, published today by HM Revenue & Customs, says that advisers – including lawyers, banks and accountancy companies – whose tax avoidance schemes are defeated in court may have to pay up to 100% of the tax avoided in fines.

Private client and tax partners are concerned the financial penalties would compromise their independence. In addition, they argue there is no clear dividing line between aggressive tax avoidance schemes and legitimate tax planning.

Currently, advisers who help their clients avoid tax by exploiting loopholes face little risk. However, their clients can be hit with heavy fines.

The rules would aim to target what the report calls "enablers" of tax avoidance, such as bankers, accountants and lawyers who are "intrinsic in, and necessary to, the machinery or implementation of, the avoidance".

Osborne Clarke private client partner Andrew Goodman said the legislation could pose a "major challenge to lawyers' independence". He continued that lawyers could be put in an "unattractive position", where they would have to explain to clients: "There are other things you could do but I can't advise you because it is too risky."

Other partners question how HMRC would distinguish between tax avoidance and routine tax planning carried out by mainstream accountancy and law firms. "It's going to be a difficult job to find where the dividing line is," said one City tax partner.

Withers private client partner Christopher Groves added that HMRC could use the new rules "to attack legitimate planning".

He also argued that the market for aggressive tax avoidance schemes "has been pushed to the margins" and that "reputable firms don't do that kind of work anymore".

The consultation is open for comments until 12 October.