Wednesday, May 27, 2020

Tax Avoidance Defeats – Investors Fight Back In Court

Must read

Struggling Forex Broker Bought Flats With Company Funds

A forex broker whose company was approaching financial meltdown switched £1.05 million from a business account to buy two apartments in Dubai in a...

Stock Markets Slump To Worst Quarter In 37 Years

Stock markets slumped to record losses in the first three mnths of the year due to fears over how coronavirus impacts the world economy...

Operation Airlift Underway For Brits Stranded Abroad

The British government is working with partner airlines to bring thousands of stranded travellers back to the UK. Foreign Secretary Dominic Raab has set aside...

Expat Landlords Get Buy To Let Mortgage Aid

The financial pain of coronavirus uncertainty for buy to let landlords has been eased by the housing minister. Secretary for Housing Robert Jenrick is extending...

Financial and investment advisers are expecting a flood of law suits as HM Revenue & Customs (HMRC) cracks down on tax avoidance schemes.

Industry experts say professional indemnity firms that settle compensation claims for advisers are already fleeing the market – and those that are staying are hiking premiums for tax advisers.

The move follows thousands of tax payers bearing the brunt of fines and penalties from the tax man’s relentless attack on packaged tax avoidance schemes promoted by financial firms.

The final nail in packaged tax avoidance is seen to be the accelerated payment notice which demands anyone entering into a packaged avoidance scheme should pay their tax upfront and argue whether the scheme works or not before a tribunal.

Recent months have seen a series of tax tribunal victories against packaged tax avoidance schemes by HMRC.

Duty of care

Many involve wealthy celebrities and sports stars who have the cash to take their advisers to court to claim compensation for poor advice or failing in their duty of care to investors.

These claims automatically go to the adviser’s professional indemnity insurer to negotiate a settlement.

The losses involved in overturned schemes run into hundreds of millions of pounds.

This sea change in the conduct of giving tax advice comes as the government has given HMRC new weapons to tackle avoidance.

However, avoidance is not the real issue – whatever Prime Minister David Cameron says about avoidance being immoral and illegal, it is neither and firmly supported in law by cases that go back to the 1920s and 1930s.

Tax evasion is the real issue. Evasion is a financial crime and many packaged tax avoidance schemes smack of evasion, not avoidance.

Legal options

Federation of European IFA’s chief executive Paul Stanfield feels HMRC sanctions may not hit advisers too badly because aggressive tax avoidance schemes are generally sold by professionals rather than IFAs.

“Consumers trying to get back at people who gave them poor advice may lead to higher professional indemnity costs and some smaller firms leaving the market or being swallowed by consolidators,” he said.

“I expect to see this eventually lead to insurers changing the scope of cover and how they calculate renewal premiums.”

Consumers have the choice of taking complaints about advice from regulated advisers to the Financial Ombudsman or tackling the adviser through the courts.

Lately, the courts have become the more popular option as the process is quicker and often ends in a better result for the complainant, who can claim damages for any losses.

- Advertisement -

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -

Latest article

Struggling Forex Broker Bought Flats With Company Funds

A forex broker whose company was approaching financial meltdown switched £1.05 million from a business account to buy two apartments in Dubai in a...

Stock Markets Slump To Worst Quarter In 37 Years

Stock markets slumped to record losses in the first three mnths of the year due to fears over how coronavirus impacts the world economy...

Operation Airlift Underway For Brits Stranded Abroad

The British government is working with partner airlines to bring thousands of stranded travellers back to the UK. Foreign Secretary Dominic Raab has set aside...

Expat Landlords Get Buy To Let Mortgage Aid

The financial pain of coronavirus uncertainty for buy to let landlords has been eased by the housing minister. Secretary for Housing Robert Jenrick is extending...

Financial Package On The Way For Self-Employed

Financial support is coming for freelance and self-employed expats who pay their taxes in the UK, Prime Minister Boris Johnson has promised. In his last...