Ten facts all accountants need to understand about tax avoidance schemes

The first five facts here essentially provide support for those accountants who have already chosen NOT to advice on such schemes.

  1. Accountants should only promote such schemes if they are confident that they understand ALL of the risks and consequences for their clients;
  2. Accountants do NOT have to advocate structured tax avoidance schemes;
  3. Accountants who promote such schemes honestly will find that typically fewer than one in ten clients will proceed once they understand all of the risks;
  4. Accountants do NOT have to notify all clients that such schemes exist;
  5. Accountants are NOT at risk of successful negligence claims if they fail to alert clients to such schemes;

And here are five further facts which should also be borne in mind by those accountants who are nonetheless tempted to look further into the subject:

  1. Encouraging a client to undertake a structured tax avoidance scheme is much like encouraging them to make a specific investment;
  2. It takes a fair amount of time to get to grips with all of the relevant details of a structured tax avoidance scheme;
  3. HMRC may announce a change in the law at any moment – leading to rushed (and perhaps botched) attempts to revise the scheme by the promoters;
  4. Having committed all that time to learning about the scheme there may be a temptation to persuade someone to ‘invest’ even if they might not otherwise choose to do so;
  5. If, some years later, the scheme is ultimately held not to work the client may sue the accountant for failing to adequately highlight the risks.

Together these ten facts should provide support for those accountants who choose not to advise clients on structured avoidance schemes.

If your clients do need advise on how to reduce their tax liabilities, without causing problems for themselves or for you, it can still be worth speaking with one of the specialist Tax Adviser members of the Tax Advice Network. Just use the search facility on the home page here to find someone with the relevant expertise.

Full disclosure: I originally wrote these ten points in 2009 for the now defunct TaxBuzz blog. Much has changed since then but nothing that makes it easier or more acceptable for accountants to advise on structured tax avoidance schemes. On the contrary, the generally accepted Guide to Professional Conduct for those working in tax (PCRT) now makes clear that it is wrong for members of the main accounting and tax professional bodies to advocate such schemes.