At last week’s annual Taxation Awards event I found myself chatting with someone who used to promote tax avoidance schemes. What he had to say was well worth sharing with readers of my blog.
First though let me offer some background. I want to provide enough details to justify why what Mr X had to say is so important. But I am respecting his preference not to be identified here especially as I made no notes at the time so I do not want to specifically attribute his comments.
I have known Mr X for 15 years or so. When I was in practice I attended many meetings with him and was always struck by his honesty and integrity. Although I was never a fan of tax schemes, when Mr X promoted a tax scheme I knew HE had always researched it thoroughly himself and understood exactly how it worked. He was in favour of making full disclosure on tax returns and was very choosy about the schemes he promoted – even before the DOTAS regime was introduced ten years ago.
Mr X has been a top private client lawyer and tax adviser for years. He belongs to a number of professional bodies; his expertise and independence are highly regarded and he frequently writes cogent and hard hitting articles for the professional press.
Our conversation started by referencing the latest media reports about the icebreaker tax scheme and Gary Barlow and Take That. See: Why weren’t all accountants promoting those tax schemes? This is a post I wrote when the same story first became news almost 2 years ago in 2012: (It has since become apparent that the scheme dates back to 2004 – rather than only to 2010 as I suggested in that post)
When we talked I learned that Mr X has found that the market for tax schemes has dried up in recent years.
In his experienced and credible view NO professional accountant in their right mind spends time promoting tax schemes to clients any more. There is NO point in accountants spending time trying to get their heads around new schemes, as an independent conclusion will always be that the scheme will not survive attack by HMRC.
Mr X told me that in his view the only people still actively promoting tax schemes to clients are the naive and those whose independent view has been compromised by their need to earn a living. Oh, and the liars who know that their assurances are unreliable.
There will always be greedy people who will want to believe that they can reduce or remove a large tax bill by doing what they think the rich and famous do. And there will always be slick salespeople who can exploit that desire for a profit.
Mr X still advises on tax but confessed that he no longer promotes ANY tax schemes. He does however get involved in helping extricate people from schemes that have been found not to work or where this is now anticipated to be the likely outcome.
When I was at Accountex last week I noted that two well known membership groups for accountants are encouraging their members to use the services of their preferred tax scheme promoters. I tend to think there is a combination of naivety and greed involved in such arrangements.
Having said that, maybe this is the right approach for that handful of clients who want to know what their options are. Especially as they will only want to pay a fee if someone is going to help them pay less tax.
I must admit though that I wonder how often well advised clients actually choose to go ahead with tax avoidance schemes these days. I have noted previously that barely one in ten clients proceed once they understand what is really involved.
As Mr X confirmed when we spoke, the outcome of any remaining tax avoidance schemes must be in some doubt. Because of the inevitable prevarication and argument the final outcome will typically only become clear over the next 5-10 years.
Much better, in my view, to simply seek the advice of a suitable experienced tax expert to help ensure that a client’s transactions etc are being arranged in the most tax efficient and non-controversial manner. Mr X does this. And the Tax Advice Network provides a simple way to secure such input from independent tax experts around the country.
Related post: Why weren’t all accountants promoting those tax schemes?