HMRC takes on tax scheme promoters

There has been a spate of professional negligence claims against the promoters of tax avoidance schemes after a clampdown on "aggressive" avoidance by HMRC, according to legal and accountancy experts.

According to law firm RPC, the claims are made by individuals that took part in tax avoidance schemes that date from 2005 to 2007, when a lot of schemes were set up that are now being challenged by HMRC. Those being sued include "boutique" tax advisory firms, accountancy firms and financial advisers, RPC said.

Bluefin recently highlighted a RPC blog which said...

Continued...

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Comments
sdphilpott's picture

Selling tax schemes

sdphilpott | | Permalink

I have come across people who probably have been mis-sold these schemes and not been warned of the risks, although it should be pretty obvious there are no cast iron guarantees. When I talk to clients about potential schemes I ensure they are fully aware of the risks involved before they sign up. I also get them to sign a document that confirms this in writing so this argument can't be used down the track. In my experience most tax providers are pretty honest with the client about the risks involved but I have heard a fair few horror stories too. The fact is you need to have a certain mindset if you are going to get involved in these schemes and clients who are going to worry constantly about the potential failure of a scheme should not be getting involved in the first place.

JCresswellTax's picture

Absolutely 100% spot on Mr Philpott

JCresswellTax | | Permalink

Actually couldnt agree more...

johnjenkins's picture

First of all    2 thanks

johnjenkins | | Permalink

you have to look at the scheme and legalities.

If it's legal then you have to look at whether it's artificial.

When I start hearing about "risky schemes" and "clients should be aware of a potential failure" I tend to think "are these people really Accountants" or are they just greasy sales people. We've got enough of them in the banking industry.

carnmores's picture

@John

carnmores | | Permalink

I wish I had the nous to work out whether its legal there all artificial !

I thought most "scheme    1 thanks

secondhand_22 | | Permalink

I thought most "scheme sellers" know its all a big scam and, after putting up some token arguments to HMRC for a while, whilst they extract the profits from Scheme Sellers Limited, go into administration and start afresh.

Isn't that what a once prominent outfit in Leeds did?

The word “Scheme”, itself, gives away that there's a fundamental

Trevor Scott | | Permalink

issue but they won’t tackle the real problem….being excessive taxation in certain countries.

 

Nothing will stop, and why should it, a multi-jurisdictional legal entity fulfilling its duty to maximise shareholder value through good tax planning.

 

HMRC takes on tax scheme promoters

ver1tate | | Permalink

The word 'scheme' itself should be enough to warn those planning to employ it that it is not entirely legal. Among the definitions of this word are PLAN, PLOT, CONSPIRACY.

Too much ....

Trevor Scott | | Permalink

.... to claim that a scheme is illegal (by virtue, under basic logic, of your claim that such isn't entirely legal). Some schemes work and are legal.

Do you work for HMRC?

johnjenkins's picture

The schemes are

johnjenkins | | Permalink

legal otherwise HMRC would be able to claim "tax evasion" rather than agressive "avoidance". No doubt some bright spark will think of an RTI system of sales tax so that it wouldn't matter where a company is based.

Agree with Mr Philpot

VIOLA26 | | Permalink

I agree with Mr Philpot entirely.

Also, if a client decides to sue the promotor / accountant rather than allow the promotor to pursue the litigation through the Courts (ie: before the technical outcome of the planning is confirmed and litigation has run its course) isn't the promotor's defence that it wasn't given the opportunity to mitigate the loss - often appeals against a decison in the FTT in HMRC's favour are overturned in the higher Courts. (This assumes the costs of ongoing litigation are pre-funded and the client isn't being asked to make an additional cost contribution towards ongoing litigation). 

 

  

 

What are the damages?

The Black Knight | | Permalink

What are the damages?

The tax that could have been saved by using a different avoidance method?

The penalty for taking reasonable care? 0%

The costs of the client not reading the contract? Contributory negligence?

The costs of the client voluntarily surrendering the tax? Isn't that deliberately engineering a claim = no damages / insurance fraud.

The costs of a low interest loan?

Can't see it.

Expect a hike in your P.I. cover on the back of this bullshit though?

 

I should add I am not keen on these schemes but they are low risk and a low interest loan. Why wouldn't an unrepresented client just stick to their guns and let the tribunal sort it out rather than just pay up!