28 Aug 12
1 edit
-Removed-Hi divegeester,
My past life, before my present position, was as a tax adviser for one of the Big 4. As part of this job, from time to time, I sold schemes like the ones being referred to here. I cannot comment on the particular scheme here, as stamp duty was not my speciality. But I often felt clients weren't given the full picture by the firm.
For example, some schemes advertised the fact that the scheme had been given the approval by 'a leading QC'. No mention then, that the first QC visited (and 'the' leading QC in his field) had said 'Not a cat in hell's chance.'
Of course, these schemes can and do work. However, it is obviously in the Daily Telegraph's interest to make tax avoidance sound much easier and simpler than it is. Indeed, the fact that it may technically 'work' is only part of the story.
I would ask any professional firm offering such a scheme the following questions (if these are relevant to you):
1) How certain are you that the scheme will definitely work?
2) If they give you a very positive answer, then confirm with them that, if it doesn't, then they will refund all your fees, as well as meeting any court costs you incur.
3) Is the scheme likely to be challenged by HMRC, possibly in the courts? Whatever they say, it is always possible to challenge these schemes, and HMRC sometimes does this knowing they won't win. They have limitless pockets; you don't.
4) If so, will you be picking up all the defence costs?
5) Is it possible that I might need to go to court?
6) If there is a motive element to the legislation, and I am asked whether this was being done for tax avoidance purposes, what would you expect me to answer? If 'no', then have I committed perjury?
I think the costs point is important. Remember that, even if you win (and HMRC become liable for your legal costs) you will only recover, say, 65%-70% of the total costs of legal action. If the firm is not covering all this, you could win the case, and still end up out of pocket. Plus all the time, hassle etc.
There are plans to introduce a General Avoidance Rule in the UK shortly. It may not affect your scheme, of course, but it is a sign of how much harder the UK authorities are looking at aggressive schemes and how hard they will be prepared to fight them in the future.
I also believe there is a moral dimension to this, but others would argue that there is not, so that's a matter for you.
Sorry I can't comment on the scheme specifically, but I hope these general thoughts are of some help.
