'Rogue' tax advisers cause misery for law-abiding people: Greg Wright
IT’s a scenario horribly familiar to anyone whose life has been thrown into chaos by the loan charge scandal.
You’re an honest, hard-working citizen who has no intention of avoiding your responsibilities as a tax-payer. You trust your professional adviser to do the right thing. Then – potentially years later – you are hit with a life-changing tax bill. The adviser, in the meantime, has often vanished, after picking up fees from a job very badly done.
The conduct of advisers has come under the spotlight after HMRC revealed that five accountancy firms have taken fees for connecting their clients to a tax avoidance scheme. HMRC uncovered ‘Introducer Agreements’, where the firms received fees for successful referrals to the avoidance scheme.
HMRC’s view is that the scheme in question does not work and fails to provide the tax advantages sought. It’s impossible to argue with the central point made by HMRC’s Director of Counter Avoidance, Jonathan Smith; that the promotion of tax avoidance is always unacceptable. To quote Mr Smith: “Accountants and tax advisors should give their clients sound advice, not steer them towards schemes that can result in large tax bills. ”
For Greg Smith MP, the co-chair of the Loan Charge and Taxpayer Fairness All Party Parliamentary Group(APPG), HMRC’s latest announcement provides more evidence of the appalling mis-selling and rogue professional advice that has caused misery for many people.
He added: “This also again highlights that accountants have been directly involved in profiting from disguised remuneration schemes and giving advice based on their financial gain from this, not the best interests of their clients.”
However, Mr Smith believes HMRC’s actions should go much further, because “simply naming firms and suggesting people shouldn’t use them” is a feeble response, in the opinion of the APPG.
He added: “The Government must stamp out the mis-selling and also the collusion between some accountants and scheme promoters. The Government has said it will act, but it must be decisive and clear to finally stop the harm done caused by mis-selling and rogue advice”.
HMRC stressed that, when it names a business or individual that has a role in a tax avoidance scheme, it is often only one part of wider action. So far, it’s published details of more than 170 tax avoidance schemes and promoters on GOV.UK to warn taxpayers and issued stop notices to promoters, requiring them to immediately cease promoting schemes. Breaching a stop notice is now a criminal offence, with penalties of up to £1m. To date, HMRC has issued 73 stop notices and it has also launched criminal investigations and prosecutions where appropriate, alongside work with professional bodies and regulators.
Although these actions are welcome, the fact remains that a number of the accountancy firms “named and shamed” by HMRC are still trading, after pocketing fees for successful referrals to an avoidance scheme. Their unfortunate clients, who were let down by experienced professionals, are probably feeling distraught. Something for the regulators, and the Government, to ponder.
Greg Wright is the deputy business editor of The Yorkshire Post