Tax planning and the new rules on disclosure of tax avoidance schemes. By Nichola Ross Martin

I couldn't help but be amused by the amount of moralising there was in Mike Bassy's post.

I hope he sees the irony in using such value laden language to dismiss value laden language.

I'm with Nichola and Mark but not quite with Richard on this one.

Values? What values? Is Richard implying there should be some sort of individual subjective test? If so I'd love to know how that gets articulated.

I've never met a client yet that didn't feel good about paying less tax or an accountant that didn't think twice (more likely relieved) the client was happy.

If on the other hand a practitioner has misgivings about a particular scheme, then that should be enough to prompt seeking a second opinion.

There is no such entity as "tax avoidance". What HMRC started out to do was stop artificial (not pertaining to normal business practice) schemes, set up purely to lower the eventual tax liability of the particular tax payer.Of course all the major schemes (big money) were too complex for HMRC to deal with so in order to re-coup their losses HMRC turned on the small business.
I think it fair to say that most of the larger Accountancy firms have realised what they started and toned down their approach.
So the answer is simple anything artificial, although legal, is unacceptable.Problem is HMRC will not stick to that.

on tax, and especially avoidance schemes, but what worries me most about this is the open ended threat that is implicit within the statutes.

The Revenue says "a tax arrangement may need to be disclosed that HMRC is already aware of, or is not considered to be avoidance" but what does that cover? In one office it might be an offshore scheme, in another (or even to another officer in the same office) it could be taking dividends rather than salary and "avoiding" NI.

Does that really mean that if five years time, when perhaps they introduce anti-dividend legislation they will be able to go back and say "but you didn't declare it was an avoidance scheme"

I have a feeling that boundary line will only ever move in favour of the Revenue, and the last ten years of really anti-business and particularly vague tax laws will only now degenerate even further.

I also wonder if the PI insurers are going to eventually make us put a disclaimer on the tax return along the lines of "nothing in the preparation of these accounts leads us to believe that they participate in a tax avoidance scheme under current interpretations of legislation"

I think that this will clarify matters better for Richard, as well as the vast majority of SME advisors.

If a client (these are the entities us Accountants work for) asks for their tax affairs to be set out so as to pay the least tax possible legally; then the Accountant has a choice. Values don't come into it apart from the Fee. It is a straightforward business proposition.
I personally wouldn't create an artificial (although legal) situation, but if a colleague did I would think no more or less of them. Its purely business.
An Accountant is not there to sort out HMRC mistakes although they are the first in the firing line and normally have to.

I've never read such pompous clap trap. Accountants are there to do a job: present accurate figures and find legal ways to reduce tax bills. Why else do we pay your outrageous bills ? Keep your values and phoney moralising to yourselves. What a puffed-up bunch of self rightious hypocrites the accountancy profession has become. Get on with the work - or get fired.

I'm bemused? You don't know what they are?

Do you live in an amoral world?

I always brought values to play in my tax advice. For example:

1) no offshore
2) no trusts for tax benefit alone
3) no artificial steps put into transaction for the sake of securing a tax advantage

It didn't matter if these were legal. I didn't do them.

As I've said before - if the client wanted them - they went elsewhere. My values were always more important than theirs.

That's what I mean by values - and this nonsense that accountants aren't allowed them is the denial of the professional nature of our job.

I have said it before, and I'll say it again (and it's true) - there is no obligation on an accountant to do anything for a client they do not wish to do. This is a commercial relationship. You are in command. You can always so no. The only price is a fee - and in my experience there will always be a better one to replace that lost for an accountant who is willing to stand up for what they believe in.

So the whole relationship is value laden. Any pretence to the contrary is quite simply untrue, often told, and a simple excuse to cover unethical (even if legal) tax practice.

Richard Murphy
http://www.taxresearch.org.uk/blog/.

I'm not sure Nichola is right to say that most people can still probably follow the rule in the Duke of Westminster case. After all, paying staff under deed of coventant now may not be seen to be within the spirit of the law - and would be open to challenge as an artifical arrangement, even if fully disclosed on the principles Mark Lee proposes (and which I wholeheartedly endorse).

But that suggests a slight extension to what Mark proposes and it's a bit like this:

• Can you place all your cards face up on the table and still think the scheme will be acceptable to HMRC within the constraints of current thinking?
• If it doesn’t pass that test, does the client know the risks and want to take them?

Even if that’s the case will it pass the following further tests:

• Does it comply with our values?
• If you do it, will you feel bad?
• How will it look in the newspaper if it’s found out?
• If you know it's wrong having checked these out, don't do it!
• If you're not sure, ask.
• Keep asking until you get an answer.

This is, in effect, the Texas Instruments ethics test. http://www.ti.com/corp/docs/company/citizen/ethics/quicktest.shtml

Mark’s test is first rate. This just adds some contextual thinking.

Richard Murphy
http://www.taxresearch.org.uk/blog/.

I disagree with the wording of Mr Bassy's but agree with the sentiment.

Clients come to us accountants and ask us if we can lower their ETR / cash tax. We should be giving them advice on completely legal methods that do not rely on non-disclosure. It is up to the client to decide which methods, if any, they would like to use.

If we have an engagement letter in which we say that we will do this proactively (rather than reactive as above) then we shouldn't wait for the client to ask us.

It is rubbish to talk about morals and smell tests on our behalf as these are things for the client to decide on.

We aren't doing our jobs properly if we decide to withhold perfectly legal schemes / structures from our clients.