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What clients are saying: Tax avoidance splits client attitudes

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Of the top 10 risk factors for future offending and/or antisocial behaviour, “contact with antisocial peers” (those involved in law-breaking, drugs, violence, gangs) is the most significant. While Jimmy Carr and Chris Moyles are no gangsters, the massive public exposure to their respective tax arrangements has had a profound impact.

Tax has been, and continues to be, very big news. The “tax gap” and the need to be seen to be hard on aggressive tax avoidance through a multifaceted strategy (including DOTAS, GAAR, TAARs and litigation) ensure that HMRC action will continue relentlessly along its chosen path.

The GAAR will have to be taken into consideration by any product provider or adviser strategy that targets tax saving as one of the deliverables. That is not to say that it is likely to apply to all such arrangements – which is very unlikely; just that its potential application will need to be at least considered before the strategy is recommended or promoted.

This is precisely why advisers and their clients should demand “GAAR comfort” from instructing counsel in relation to any tax-saving strategy.

The existence of the GAAR does not mean that all other anti-avoidance legislation stops; targeted tax changes will continue to be introduced. The recent Budget and preceding Autumn Statement and Finance Bill are testament to this.

Advisers and taxpayers have experienced an increasing blurring of the lines between evasion, avoidance and planning. The concerning thing from an advisory perspective is that even legitimate planning (with good tax outcomes) has raised alarm bells, with some clients seeking far more reassurance than before, often over fairly non-contentious transactions.

But that is not the whole picture. The deliberately relentless coverage has also seen the emergence of Jimmy Carr syndrome in a growing number of consumers (particularly mass affluent). Of a sample of 21,800, 45 per cent said they would push a tax loophole as far as possible, “Jimmy Carr-style”, as long as it was legal, according to a MoneySavingExpert.com poll a while back.

Having become more aware of the tax savings to be had (legitimately and otherwise), many have had their interest piqued. Whatever the motive, this represents a great advice opportunity to engage with, helping more clients to achieve better outcomes legally, morally and tax efficiently.

Phil Wickenden is managing director of So Here’s The Plan phil@soherestheplan.co.uk 

Quotes are taken from consumer research on what they value most from their adviser.

What advisers are saying-10Apr14

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