Users of failed tax avoidance schemes will face penalties, and government will clamp down on high-risk promoters under proposals put forward in a newly launched consultation (see the Government announcement here this week – https://www.gov.uk/government/news/government-closes-in-on-high-risk-tax-avoidance-scheme-promoters
This consultation will focus on two main issues:
i) tackling the behaviour of high-risk promoters of avoidance schemes, and
ii) penalties for users of failed avoidance schemes.
It is reported that there are 20 or so firms who develop and promote aggressive tax avoidance schemes nationally and the Consultation aims to seek feedback on whether naming “high-risk promoters” publicly will distinguish them from mainstream tax advisers, and ensure that their clients know who they are dealing with.
There are some clear challenges with this approach; not least who will be deciding who is considered to be “High Risk” enough to be publicly named and shamed, and it is hoped that this would not be taken lightly as there are many tax advisers who offer tax planning that does not border on illegality and whose business could be greatly impacted by being named.
Know who you are dealing with
It can be difficult to know who to trust as, unlike with Solicitors, “Tax Adviser” is not a restricted term. There are, however, a few simple steps you can take to help decide whether you are comfortable with your tax adviser:
1. The Chartered Institute of Tax and the Chartered Tax Adviser (CTA) qualifications show that your adviser has strong tax knowledge and has committed to working within professional guidelines.
2. The Solicitors Regulator Authority (SRA) further regulates those firms that are registered as Solicitors.
3. Meet your adviser at their premises if possible.
4. Ask for confirmation of indemnity insurance being in place.
5. Ask whether any tax advice is subject to the DoTAS regime (this is the requirement for certain tax planning to be separately notified to HMRC)
6. Check whether any tax planning has a “smoke and mirrors” element to it – tax planning should not be reliant on no-one ever finding out about it.
If you want a second opinion on any planning you have been presented with, our Chartered Tax Advisers at Edward Hands and Lewis offer this as a standalone service.