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Advisers call for clarity on unacceptable tax avoidance


Advisers say they want clarity around what is acceptable and non-acceptable tax avoidance after the Government announced plans to fine those promoting tax avoidance schemes.

Earlier this week, a consultation from HM Revenue & Customs set out plans to clamp down on advisers in its list of “tax avoidance enablers”.

It proposed penalties for those found to assist in avoidance schemes of either 100 per cent of the tax evaded or £3,000 – whichever is higher.

The consultation follows a Budget pledge that will see the Government attempt to raise £12bn by 2020 through cracking down on tax avoidance.

Advisers welcome HMRC’s proposals but say there needs to be more clarity around what is acceptable tax and avoidance and what is not.

Yellowtail Financial Planning managing director Dennis Hall says: “Some clarity would be helpful and some examples of what is or isn’t a breach.

“They have tried to do that in the past but there is still some confusion in people’s minds. The closer you get to something that is not illegal but is probably frowned on by [HMRC] is the area of biggest confusion and that needs some clarity, especially if people are now going to get fined for it.”

Philip J Milton & Company managing director Philip Milton says: “What they are talking about are the things that have never really been allowed. Up until recently, advisers, accountants and others have been pushing the boundaries.

“Am I a ‘tax avoidance enabler’ if I encourage my client to put money in a pension or an Isa or to give money to charity? These are all things that are legitimate tax avoidance practices.”

But Lift Financial chartered financial planner Kevin Neil says the consultation will help better distinguish tax evasion, tax avoidance and non-contentious tax avoidance.

He says: “We now have a tax landscape that is three dimensional. You have tax evasion which is still illegal but with the legislation, and the decisions that are getting handed down as HMRC pursues some of these schemes, there are clearly laid down tax reliefs that are available that parliament has created within legislation to address specific issues.

“That part laid down by parliament should be referred to as tax planning because it is legitimate and non-contentious.”



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There are 8 comments at the moment, we would love to hear your opinion too.

  1. Advisers should not need HMRC to tell them that if it looks too good to be true it probably is.

  2. “Am I a ‘tax avoidance enabler’ if I encourage my client to put money in a pension or an Isa or to give money to charity?”
    Er No. but does it sound like a scheme specially designed to exploit tax rules to the limit and sound a bit dodgy? then it probably is.

  3. The proposal should be challenged in court. To impose a fine for acting within the law is outrageous and an infringement of human rights.

  4. How about the simple test of 1. Is the scheme’s primary function to avoid tax? 2. Is the avoider financially better off for participating in the scheme. 3. Did the enabler benefit financially from arranging the scheme. If the answer to these three questions is yes then it should probably result in a fine for both participants. How much of this is just headline grabbing though as this rhetoric has been ongoing for decades.

    • I don’t wish to join the ranks of those who are pretending that they can’t understand the difference between legitimate tax avoidance and an artificial scheme, however: all three of your tests would be answered “yes” by an adviser recommending a stocks & shares ISA and taking a fee.

      The “intention of Parliament” is the important bit. When Parliament gave tax breaks to film producers it was intended to encourage people to invest in British film-making and give them a tax incentive which recognised the ultra-high risk inherent in doing so, not to allow people to avoid tax with *zero risk* to themselves.

  5. @Steven Balmer, Yes and how about just 1 other question – Is it a Govt./HMRC sponsored tax break scheme? (ISA Pension, EIS, VCT, BPR) If the answer is ‘Yes’ then do it if it is suitable and appropriate.

  6. If you’re seeking clarification on this, you’re quite possibly part of the problem.

  7. To be honest, this would all go away, if the laws were written in the first place by people that actually understood the implications of what was being proposed.

    Under the current “rules” as laid out by HMRC, you can indulge is some perfectly legal and legitimate estate planning measures, that happen to have some side benefit of IHT avoidance and next thing you know, your being fined and censured by HMRC, who are judge, jury and executioner, be bankrupted and therefore not have the resources to challenge it in court.

    Anyone that thinks a system that allows this is reasonable or fair, clearly has failed to understand what tax actually is. Which in very simple terms is legalised, legally enforced theft.

    Yes tax is necessary, but the double standards being displayed are breathtaking, the usage of trusts is “tax avoidance”. Is it officially sanctioned by HMRC? No, not really, so if HMRC suddenly decide to retrospectively decide that one of the more common forms of trust arrangement, such as a DGT is now unacceptable, every single person reading this will likely be fined, and held up as a criminal. Yes it would get fought, and yes HMRC would lose, but if they’ve collected £bn’s in the meantime and had that in their hands for the time it would take to go through the courts, they will be quids in, meanwhile many clients and advisers would be bankrupted, with no recourse or damages available to them.

    This is in serious danger of becoming an unaccountable police state, where the goalposts are retrospectively moved and hang the consequences for anyone.

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