New avoidance rules battle rages on

Accountants owe it to their clients to stand up and fight for their rights around marketed tax scheme proposals, according to specialist consultancy Peak Performance.

Speaking at the 2020 Tax Conference in London last week, Roy Lyness and Steve Bradshaw said MPs and parliament were being mis-led on marketed avoidance.

“Under the new legislation [due to be enacted in the Finance Bill 2014 this July] you’re guilty until proven innocent, but there’s still time to lobby for change,” Lyness said. “We urge you to make contact with your MPs and fight for the rights of your clients. In years to come they [your clients] will say to you ‘what did you do when you knew this was going on’?”

The pair from Peak Performance were...

Continued...

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Comments

Turkeys, Christmas, vote, don't, for    9 thanks

Vaughan Blake1 | | Permalink

Re-organise these words to form a well known saying or phrase.

We’re not flying the flag for tax avoidance - we’re flying it for the truth and judicial process,”  Mmm.... and the truth is - the games over boys, come out with your hands up!  You know things are getting desperate when they play the 'human rights card'.  You also have to admire HMRC's timing, Jimmy Carr, Chris Moyles and now Gary Barlow, right on cue.

In the early nineties chaps in shiny suits were telling me I was an idiot not to get clients to pay bonuses by way of Turkish Lira loans, or splitting the ownership of their company car with the employee 99:1 etc etc.

'This ones a larverley runner guv, fully guaranteed by three barristers, it is. Never let you darn, a real gem'. 

Arranging your affairs to minimise tax is one thing, creating a complicated web of dubious transactions with no commercial reality really is another.

 

ShirleyM's picture

Marketed tax scheme    6 thanks

ShirleyM | | Permalink

Accountants owe it to their clients to stand up and fight for their rights around marketed tax scheme proposals, according to specialist consultancy Peak Performance.

The description says it all. Why do they exist? They grey the area between avoidance and evasion, and where the law is grossly misused and deliberately misinterpreted I do think they should be re-classified as evasion, and criminal action should follow.

johnjenkins's picture

Many moons ago    2 thanks

johnjenkins | | Permalink

HMRC stated that if complicated tax avoidance schemes had anything artificial in them they would be banned. So why is it that these schemes were allowed to flourish? Backhanders spring to mind. To me anything artificial has to be evasion. You don't need new laws etc.

What's the betting DC had a quiet word with Gazza to the effect that if he "came out" his gong would "stay in".

 

Interesting but my view would    2 thanks

The Black Knight | | Permalink

Interesting but my view would be that these were flogged by unqualified or inexperienced accountants who didn't understand how they worked or the basic principles of tax law on which they would inevitably fail.

Did they account to their clients for the commission as they should have.

Even the promoters privately acknowledged that they did not work and it was only a cash flow excercise.

Not what I would call best advice or ethical behaviour as the commissions no doubt helped funnel their blind quarry into the net.

I wonder how many clients realise that the commissions should be theirs or if they did get the commissions the fee was advice so they can therefore sue the accountant.

If I were Jimmy Carr or Mr Barlow

I would be asking my solicitors whether I WAS ADVISED CORRECTLY and in particular to the potential damage to my future earnings when someone at HMRC leaked this as they do.

I would be asking what commissions were paid to my accountants and was this accounted to me in accordance with the accountants professional rules of independence?

Did the accountants act with independence of mind and spirit?

Unfortunately the promoters of these schemes have done a lot of damage to our profession even though many were not even in it.

They have influenced overkill draconian legislation and HMRC behaviour to be carried out on the law abiding.

Diverted resources that should have been spent on Evasion.

and assisted in bringing this country to it's knees.

Unfortunately in dealing with a problem we have overkill legislation that will affect the ordinary folk in ways they least expected it.

Talking of Jimmy Carr

The Black Knight | | Permalink

Anyone heard how the K2 enquiries are going. Not turned up at tribunal yet and has been going on some time.

Stop being brainwashed.    1 thanks

David Gordon FCCA | | Permalink

 

 1) We represent and advise our clients. Our duty is to the client.

 2) There is no concept of "Morality" or "Ethics" in Tax.

 3) Tax in a functioning democratic society is an agreement between the subject and his fellow subjects,  and those they appoint to manage their society, that certain matters are best dealt with by paying into a central fund and distributing from that fund. For example: Defence, Education, NHS, Police.

4) The objective fact is that MPs collectively and individually are in large part continually miserably failing to provide a constructive working tax system. Further they have failed to adequately supervise the hired administrative department. thus allowing it in large measure, to run things for its own convenience rather than for the purpose for which it was created. Including according to a recent whistleblower article in the "Times" to pursue the easy cases rather than those most deserving of attention.

 The consequence is we have a flood of tax rules upon tax rule, often written in language which would drive my old English teacher insane.

 When recently the courts allowed a known murderer to go free because the law so allowed, nobody denigrated the lawyers for the defence. It was recognised that the defect was in the law and the prosecution thereof. Why should tax advice practitioners be judged differently?

 Some of my colleagues are being really po-faced about this.

An expert tax counsel got my client off a six-figure penalty because HMRC got its paperwork wrong, Would the po-faced really expect me to have advised my client "I think we can get you out of this, but "Morally" you should pay it, so tough luck"?

 A) If your lawyer gets it wrong, client pays. If your lawyer gets it right, then you are judged to be within the law. That is it. It is all it should be with regard to taxation.

B) This is quite separate from the adviser's duty to honestly and objectively advise the client on the legal / money risks of any tax avoidance scheme.

If you have taken on the remunerated  role of tax adviser but you are not working according to A & B above, then you have lied to your client, because the above is what the client reasonably expects.

 

 

 

No ethics?    2 thanks

The Black Knight | | Permalink

Morality has nothing to do with it I agree.

But professional ethics most certainly has.

I would also say that penalties and tax are different playing fields.

and would argue a clients position even if they had got it wrong, a fair trial with representation.

THAT does not excuse deliberately getting it wrong in the first place.

If we cannot be trusted then HMRC should go for evasion if it's deliberate negligence backed up by false accounting.

Make a few sit up and take notice then.

 

Post Script

David Gordon FCCA | | Permalink

 

A few years ago a Director of the Financial Services Authority publicly complained in the professional press about the number of FSA registered firms that were now employing professional compliance advisers.

I wrote to him, pointing out that firms did not appoint professional compliance advisers because it was the fashionable thing to do. They had better uses for their money.

They employed them only because the devious rules he and his colleagues had devised, had created a situation where these compliance firms were deemed necessary.

 

David Gordon

mewsans | | Permalink

Thank you David for providing some balance to the majority of comments which seem to mainly be from "Outraged of Tunbridge Wells"

Obligation?    1 thanks

nickja | | Permalink

"Accountants owe it to their clients to stand up and fight for their rights around marketed tax scheme proposals, according to specialist consultancy Peak Performance."

If accountants recommend and financially benefit from marketed scheme proposals, it would be unethical and monumentally hypocritical NOT to stand up and fight for their clients' rights.   

If, however, accountants make in clear in their terms and conditions that they not prepared to prostitute themselves, then there can be no such obligation or debt.   That they might then choose to help a client navigate the storm is a matter of choice, not obligation.

 

 

Dear Black Knight    3 thanks

David Gordon FCCA | | Permalink

You are correct.

 But that comes under my item B, and the previous note re Professional Negligence.

 The objective fact remains that if taxpayer enters into a tax scheme, and in court it is judged that the scheme is within the law, that is, I repeat it, the scheme is within the law.

 If the law is drafted in such a way that educated clever persons believe it has more holes in it than a used dartboard, until and unless they are proven wrong, they are entitled to act on that opinion.

 This is quite different from behaving similar to a used car dealer who welds together two halves of different cars and sells the result as a low-mileage beauty. That is to do with the vendor's personal morality.  

Unfortunately this dishonesty is not specific to car dealers or tax plan salesmen.

The point is that thankfully 99.99% of car dealers and tax advisers do not behave in this way.

 It is morally and ethically wrong for knowledgeable members of HM Government and HMRC to blame  the profession for the dog's mess their dog has left on the carpet.

Just because some very wealthy guys have been judged in error, does not mean that your local MP is not using tax avoidance advice. The only difference is one of scale.

 

 

johnjenkins's picture

Our duty is    3 thanks

johnjenkins | | Permalink

certainly to the client. Would we "make up" expenses in order to reduce tax liability, of course not. Is creating an artificial scenario any different?

If you want to look at artificial scenarios that don't work try IR35.

stepurhan's picture

Backup please    2 thanks

stepurhan | | Permalink

David Gordon FCCA wrote:
Unfortunately this dishonesty is not specific to car dealers or tax plan salesmen.

The point is that thankfully 99.99% of car dealers and tax advisers do not behave in this way.

That sounds like an unrealistically high percentage to be stated as fact. Do you have anything to back that up other than the fact it supports your view?

Being against abusive tax schemes is not, for the most part, a moral question. At best they require an interpretation of the law that, as is proved by these cases being lost, is unsustainable. It is one thing to stand by a client when you feel there is a genuine justification for a claim. It is quite another to twist the words of the legislation beyond their original meaning, and then create a complicated structure to take advantage of that interpretation.

I might choose to no longer act for a client that used such a scheme for moral reasons. I would advise against them in the first place for much more practical ones. A tax saving that you have to pay back with interest and penalties is no saving at all. If, in my judgement, a scheme a client brings to me is likely to have this result, I will tell them so.

Sorry you can't have it both ways    2 thanks

andrew.hyde | | Permalink

If it's true that there is no 'morality' in taxation then you can hardly complain if someone doesn't respect your 'rights'.

For the record, I think that people's 'rights' should be respected.  I also think that you can't claim 'rights', without conceding that you have 'responsibilities'.

RIghts and responsibilities are surely a question of morality.  In a completely immoral society they would not exist.

No

The Black Knight | | Permalink

andrew.hyde wrote:

If it's true that there is no 'morality' in taxation then you can hardly complain if someone doesn't respect your 'rights'.

For the record, I think that people's 'rights' should be respected.  I also think that you can't claim 'rights', without conceding that you have 'responsibilities'.

RIghts and responsibilities are surely a question of morality.  In a completely immoral society they would not exist.

Morality has nothing to do with the law or tax.

In fact i'm not sure what it has to do with anything.

Otherwise you could refuse to pay it when it is used to kill children with collateral damage.

Artificial scenarios ain't no such thing.    1 thanks

David Gordon FCCA | | Permalink

 

 I repeat again and again.

 If a tax avoidance plan is judged in tribunal to be within the parameters of current regulations then by definition it ain't artificial. It is within the rules.

The fact that the rules have turned out to be the equivalent of a bag full of fivers with a label on it saying "Take me", or half-baked is a different consideration.

If it is not so judged, then it ain't a tax avoidance scheme, it was a forlorn hope.

Either way "Artificial" does not come into it. Believers in the truth of the rules (and fairies at the bottom of the garden) should chew on this, another of my true stories:

 My client was a well paid bank executive (not a money dealer or similar) who worked from home. A major part of his remuneration was linked to performance. The bank set a performance target each year. he worked all  hours available and exceeded his target by a factor of two. We submitted an expenses claim on the "Wholly Exclusively and Necessarily" basis. After enquiry, HMRC accepted that the claim was in order on that basis. But, HMRC refused a proportion of the claim on the grounds that: The earnings over and above the target set by the employer were "Not necessary" to retain the employment. In which case expenses agreed as  "Wholly Exclusively and Necessarily" to earn that salary were not according to the regulations and case law, "Necessary for the employment".and therefore disallowed. It took three years and £9000 paid out by our fee insurers, God bless'em, so sort out this nonsense. Including two inspectors of taxes coming down from Manchester to my office to argue the matter. The amount of tax directly involved? £2,000. HMRC's interpretation was so outrageous that we were not going to let go. Thankfully our fee insurer agreed with us. (Just imagine the effect on several thousand other bank employees if HMRC had got away with this)

Tax scheme operatives do not have any monopoly on "Artificial" interpretation of tax regulation.

HMRC get away with it because most clients, certainly mine, simply do not have the muscle to fight back.

I am certain that most accountants if they examine their files will find similar cases therein.

So HMRC garners hundreds of small sums to which they have no "Ethical" entitlement.

 

 

 

A genuine question

andrew.hyde | | Permalink

The Black Knight wrote:

Morality - In fact i'm not sure what it has to do with anything.

I find this genuinely puzzling.  You are surely a civilised person who makes moral decisions about your own conduct every day.  But do you choose to switch off your moral compass when you sit behind a desk?

 

Morals    1 thanks

The Black Knight | | Permalink

Morals are surely only a result of group norm behaviour.

or whatever I choose they are.

On that basis given everyone was at it avoidance and evasion are moral.

Is sitting naked behind my desk immoral.

Morality has nothing to do with my work or professional judgement.

I will however exercise the ethical standards of my profession. Not always in the sauna though.

Morality seems to be a religious concept and I do not hold in with religion, being a non subscriber. Having repented.

 

MARKETED TAX AVOIDANCE

ROY LYNESS | | Permalink

Very interesting comments. I heard a great comment around this CONDOC at a presentation recently regarding this. Unproductive people targeting Productive people.

You have to decide

andrew.hyde | | Permalink

The Black Knight wrote:

Morals are surely only a result of group norm behaviour.

or whatever I choose they are.

I don't like the first suggestion.  Historically this road ends at a dark place.

The second is much better.  We are all individuals responsible for the consequences of our decisions.  Paying tax, so far as you have a choice in the matter, must be a moral decision.

Sorry to wade in...    2 thanks

jholmes | | Permalink

First off - Peak Performance charged a legal fee on top of their costs to any client who signed up to any number of their schemes. This fee was to pay for any legal/tax disputes over the schemes. So quite why they feel it is our responsibility to tackle these issues is lost on me!

Secondly - The last time i checked, i was not a cricket. It is not my job to be my clients conscience. It is my job to understand the tax law and explain the options to my clients, including the pro's and con's.

Thirdly - The last time I checked, it was my job to ensure my client paid the correct amount of tax (in my judgement that is the lowest amount of tax that they are legally obliged to pay)

Fourthly - Anyone who pays in to a pension fund is avoiding tax. SO, if any of you further up the list are complaining about these naughty tax dodgers, but are in fact paying in to a pension fund, i have one word for you. Hypocrites. And before everyone starts telling me its different i ask you to remember that the vast majority of these schemes are not illegal.

Fifty shades of grey?    1 thanks

Vaughan Blake1 | | Permalink

jholmes wrote:

 Anyone who pays in to a pension fund is avoiding tax. SO, if any of you further up the list are complaining about these naughty tax dodgers, but are in fact paying in to a pension fund, i have one word for you. Hypocrites.

At one end of the avoidance scale we have pensions.  I don't think anybody would object to these.  At the other we have Chris Moyle's grubby little tax scheme.  There is a line (grey I admit) and we should each draw it where we feel comfortable.  To treat the two ends of the spectrum the same, is laughable.  Hypocritic?  No, just using a bit of common sense. 

Legal today, illegal tomorrow.  Bit like the promoters, here today, gone tomorrow (some to prison so I read!)

Fifty shades of grey?

jholmes | | Permalink

Surely you just made my point for me. Legal today, illegal tomorrow. We do not make the Law and when these schemes are made illegal they will no longer be offered (personally i have never offered aggressive tax avoidance to clients, for one simple reason, in the long run it doesnt work. However, if they came to me with a scheme they had been shown, I would review it in detail and discuss it with them, if they chose to go ahead with it, assuming it was legal, then that is their choice). But, the point is today they are legal. 

And as i already pointed out, it is our job to explain the pros and cons of each of these schemes. I also agree with you that there is a spectrum on which these schemes sit, and yes pension funds are not what might be seen as aggressive tax avoidance, However, it is our job to explain these schemes, not pass moral judgement on our clients for wanting to take the risk. So i stand by my claim that those who do pass judgement (when making use of one) are being hypocritical.

Whether it be payments in to a pension fund (low risk) or investments in to a film partnership (higher risk) they are still tax avoidance. Neither of which should be used purely for tax avoidance, both should be used for genuine commercial reasons.

My advice to a client would be the same. Explanation of the risks and benefits involved and also tell them to take legal and financial advice from a qualified individual (I am not a solicitor or an IFA).

 

NO

The Black Knight | | Permalink

One works

the other doesn't

and you can still cock up the pensions one.

These discussions make the point- my last comment.

David Gordon FCCA | | Permalink

 

 Tax law is not "Law". It is agreed rules subscribed to by the subject(s) for the funding of expenditure collectively agreed to be more efficiently and effectively dealt with by a central authority. For example: education, defence, and helping those in need. (That is within a constructive democratic society) This because this system will fund and maintain a country in which we are pleased to live.

 It is a commercial deal. I put Joe Bloggs MP in funds so that on my behalf he arranges to fix my NHS, and schools.  The number of parties to the deal, and the sums of money involved may obscure this fact, but this what tax is.

 Once we move from sticking to the concept that any taxpayer is entitled to so arrange his affairs as to pay the minimum amount of tax, we open a whole can of worms.

 Our brief discussion is but a fraction of the hullabaloo that would ensue if the idea "Do what I think, not what the regulations say" gains ground.

 Our MPs correctly realise that there is something wrong with the rules, if a benefit claimant is entitled to £80,000. Sensibly we do not denigrate, abuse, and insult the claimant. We attempt to change the law.

 Besides once you allow those who wrote the junk to kid themselves that the tax rules are not unclear, it is the people who use them who are wrong, you give the rule-makers an excuse not to fix their errors.

 

 

 

 

 

 

Interesting points    3 thanks

andrew.hyde | | Permalink

The last few posts are interesting, and well put. I don't think we're so far apart.

  1. Pension relief is clearly what Parliament intended it to be.  Nobody imagines that Parliament intended the sort of thing that Messrs Barlow/Moyles/Goodnessknowswhoelse got up to.  It is different.
  2. Saying 'it's legal' isn't enough any more.  It begins to sound like an excuse for something you know is shameful.
  3. No, you shouldn't make moral judgements on clients.  Or anyone else. Matthew Ch 7 v.1 has it about right.  We're responsible for ourselves.  Every time somebody says 'well the MPs, (or multinationals or cash-in-hand brigade) are doing it, so why shouldn't I?' they have clearly missed that point.
  4. It's not surprising if someone didn't draft the law well enough.  The human mind is endlessly inventive.  If you draft a law that contains 100 falisafes, eventually someone clever will find the 101st way to get round it.  In the end GAAR is the only defence, but that's another debate.

yes

The Black Knight | | Permalink

yes we agree that avoidance is legal and I have no problem if they work.

But they don't and seem to be based at best on a complete misunderstanding

at worst a deliberate illusion of the truth. FRAUD.

There is a difference in haggling a good tax deal to a permanent loan by deception.

It would be easy to say that evasion is simply a misunderstanding of the rules, which i'm sure you agree it isn't.

Nooo

The Black Knight | | Permalink

andrew.hyde wrote:

  1. No, you shouldn't make moral judgements on clients.  Or anyone else. Matthew Ch 7 v.1 has it about right.  We're responsible for ourselves.  Every time somebody says 'well the MPs, (or multinationals or cash-in-hand brigade) are doing it, so why shouldn't I?' they have clearly missed that point.

Nooo

It's not real.

Taxes acts = reality

Bibble = Science fiction.

 

Clarity?    1 thanks

jholmes | | Permalink

Ok well first off, regardless of one's spiritual/religious beliefs, the UK legal system at its very core, is derived from biblical principles. So, taxes act = UK Law = Bible principles = Science fiction = Taxes Act ;)

I would just point out that i do agree with most people on here that these obviously contrived tax avoidance measures are not right. My earlier pensions analogy was an attempt to use hyperbole to make a point. Because, where do we draw the line? How as advisors should we draw a line. That surely comes down to our own professional judgement. But that can be as individual as you or I.

You say pension funds are fine. Great, what about offshore pension funds registered with QROPS? Are they fine too? because they can be used to avoid all sorts of taxes.

EBT's (never used them BTW) were set up for soldiers in world war one (I believe, though i am sure i will be corrected if wrong ;), they were never intended to be used as they have been. But it is not the advisors/clients fault that the trust law they were written in had a "loop hole". 

Which brings us back to the core point of morals, which is judgmental. We all know stealing is wrong. Many would argue that a starving man stealing a slice of bread is as guilty as a man who robs a bank. But some wouldnt. So my point is, we cannot act as judge for all scenarios(that's just plain arrogant). We have to take a pragmatic view, is it legal Yes/No. Is it in my clients best interests Yes/No. does my client fully understand what they are getting in to Yes/No.

If the answer to any of those questions is No, then we should not be offering/advising it to anyone.

I know not everyone will agree with me on all the points, and a forum is not the best place to get a point across (personally i much prefer sitting round a pub table with a pint), but i do think i make one or two valid points.

 

Plus i used winky faces, so you gotta like it! :)

for the record    1 thanks

David Gordon FCCA | | Permalink

 I give an outrageous example:

 Many of us are descendants of ethnic, tribal, or national groups fled from countries where the "Law" was not the fine words written, but whatever those in control happened to think it should be on any particular morning.

 Chairman Mao is reputed to have said "A journey of a thousand miles begins with one step"

To paraphrase "A capricious tax system begins with the first decision made on what the media and or politician thinks rather than what the regulation says"

 For very good ancestral family reasons I prefer to live in and support a country wherein, thank God, law and or regulation is strictly defined by an independent judiciary arrived at through constructive democracy.No more no less. Certainly not by the "Moral" or "Ethical" flavour of the day.

 That applies to tax as well as any other form of law. It is correct that as Mr Bumble said, that on occasion, "If the Law says that, the law is an ass, sir, an ass".

 If you really take issue with the above, there are plenty of other places where you might live. Those attempting to escape from them will surely swap with you.

PS

Should AccountingWEB stop accepting advertising revenue from the numerous organisations offering to save you tax?

.

 

 

 

johnjenkins's picture

I think the real point    1 thanks

johnjenkins | | Permalink

has been missed here.

If you have a set of procedures in place of which one doesn't really exist (artificial), however that said procedure is needed to make the thing work, then the whole thing becomes tax evasion not tax avoidance. There is no grey area or doubt or ethics or morality. It is pure common sense and legality. Something that is artificial cannot be legal (I include IR35, as the taking away of Ltd Co status is artificial), because it doesn't exist. HMRC should have cracked down on these schemes years ago.

the law is the law

The Black Knight | | Permalink

jholmes wrote:

Ok well first off, regardless of one's spiritual/religious beliefs, the UK legal system at its very core, is derived from biblical principles. So, taxes act = UK Law = Bible principles = Science fiction = Taxes Act ;)

I do feel quite strongly that the law and the church are separate and distinct from each other and should always be.

The bible still says that Gay people and adulterers should be put to death, which is wholly wrong. In some parts of the primitive world men and women are actually put to death for varying reasons because of these ridiculous beliefs, In the UK you are only persecuted by these fanatics but at least the law will in some respects protect you. That's Morals for you! All the great religions have similar rules you agree with us or die? Why else would an intelligent person agree. Trouble is you are indoctrinated from a very young age and its very difficult to escape if you've been programmed this way.

I did not like these avoidance schemes because they didn't work and it was the wrong advice to give if you were being influenced by £25K's worth of commission. NOT because of any moral reason.

I have seen a risk averse client who complied with IR35 then plump for a K2 scheme. I wonder how he will feel after the enquiry.

Added to which the people who I saw get excited about these schemes did not have the first clue about the basics.

Penalties ? Are these going to be based on taking advice from a salesman. Was this taking reasonable care in your taxation affairs? If you deliberately got your accounts and the rules wrong you would be talking penalties in a normal enquiry.

 

ShirleyM's picture

Avoidance    1 thanks

ShirleyM | | Permalink

My general rule of thumb is .... is the possible tax saving/avoidance capped?

Things like ISA's, charitable donations, pension contributions, basic rate tax (as opposed to high rate tax) are all capped, ie. there is a maximum amount of tax you can avoid using these methods.

Look at artificial schemes, and there is no limit to the tax that can be 'avoided'. This in itself means that this scenario was never foreseen, or intended, therefore the scheme is artificial (in my view). I think some schemes spill over into evasion, rather than avoidance, as they are based on falsehoods.

The law

Jeremy.t | | Permalink

I start on the basis of what was/is parliaments intent in making a law (tax or otherwise).  Various reliefs are available and can be abused but as with most of the cases under scrutiny the intention has been abused by a strict adherence to the words of the law - form over substance?  Although in many cases the lies that have ben spun are blatantly fraudulent!

As an accountant morality and ethics are integral, look at your institutions best advice and practices.  We are obliged to be morally higher and set a better standard.

ethical yes Morality NO

The Black Knight | | Permalink

Morality has nothing to do with it.

Otherwise I would not pay my taxes because using depleted uranium to kill women and children is not morally acceptable despite them belonging to a different religion.

Do not presume

David Gordon FCCA | | Permalink

 

 If the scheme adviser says that if you stand on one leg and whistle "Dixie" you may avoid £x trillion tax, or in real UK tax history you brick up your windows, and the judge agrees this is so, then the scheme is legitimate tax avoidance. Even if this seems a rather strange way to save tax.

 If the judge opines that you really are a bit of an idiot to have believed this advice, then you pay the penalty.

 It is simple and straightforward.

2)

 Whether or not the scheme adviser / salesman was playing straight with you is an entirely different question.

 If it may be shown that Mr Adviser / Salesman told deliberate fibs, or that his/her interpretation of tax regulation was so out of precedent as be an obvious scam, then you have remedy in law.

 Unfortunately, in order to enliven our lives there are still plenty of economically advantaged persons out there who will believe that if a guy offers you 15% interest when the bank rate is 0.5%, the adviser guy is a financial wizard.

This has everything to do with the Human condition, it has nothing to do with objective definition and use of tax regulation.

--

If I buy a copy of the bible on a DVD I pay 20% tax. If I buy a paperback copy, there is no tax.

Is this legitimate tax avoidance?

 

 

 

 

 

 

 

 

I predict a riot

The Black Knight | | Permalink

David Gordon FCCA wrote:

If I buy a copy of the bible on a DVD I pay 20% tax. If I buy a paperback copy, there is no tax.

Is this legitimate tax avoidance?

Clearly indefensible on moral grounds.

Did you check you were above ambient temperature when yo did it.

Riot !

Still if your company is in the USA bible belt and rattlesnake scheme you should be ok.

Whose money is it?

Tomazaan | | Permalink

This is a facinating debate and I suspect that there will be as many different opinions as there are contributors and each of us will have slightly different views as to what is right or wrong.

One thing that annoys me, though, is the assumption in the media (and elsewhere) that money belongs to the State and that you are lucky if you are allowed to keep it.  If you have earned money, then it belongs to you.  The law requires you to hand some of your money over to the State.  If the State wishes to take a person's money (or other assets), then the State should do so in clear, certain terms.  Anything else is akin to theft.

Mr Barlow was said to have to "pay back" millions - but it was his money to start with [and that is not a comment of the morality of whatever scheme Mr Barlow used]. 

johnjenkins's picture

@Tomazaan

johnjenkins | | Permalink

Nope it isn't our money. All money starts from the country in question (except mined ores). So all we are doing is giving it back to them in various stages, whilst we live out our particular lifestyle.

naomi2000's picture

Living in the past ?    3 thanks

naomi2000 | | Permalink

I think we have a duty to our clients to give risk aware advice.

I can't take the moral high ground here - I have worked on complex tax avoidance schemes a long time ago in a previous incarnation and still earn money from sorting out the messes left behind by later schemes.

If we were back in the 1980s and 1990s when we had some reasonably straight forward packaged schemes that actually worked and could be explained to an averagely bright client by an averagely bright general partner over lunch in the pub, then I might be tempted.

But realistically, that just isn't so any more .  As Mark Lee has said on numerous occasions, if you are competent to explain the risks and the client is competent to understand them, then the client is really not likely to go ahead.

We all know that sportsmen and entertainers are soft targets and that the ability to score goals or sing harmonies does not equip you with the skills to tell good advice from bad or understand the very complex risks.

The snag is that most of the accountants who actually understand the risks have got out of the game completely or turned to sorting out the messes as an easier and less stressful way of earning a living.