The failure of tax avoidance schemes sees an increase in claims against professionals
The autumn statement by the Chancellor has yet again focused everyone's minds on questions of tax rates and VAT increases. This comes shortly after the recent news report of a tax consultancy firm facing multiple claims from clients over a failed tax relief scheme. Sadly, such news reports are not uncommon. There has been a marked increase in the last few years of claims against solicitors, accountants and tax advisers in relation to negligent tax advice and in particular, in relation to various clever tax saving schemes that have been found on investigation, to have flaws.
Unsurprisingly, the harsh economic climate has seen a significant increase in both companies and individuals looking to save tax through various tax avoidance schemes. On the back of this, there has also been an increase in the number of firms and consultancies providing specialist tax saving schemes and taking advantage of opportunities provided by recent legislation - entrepreneurs' relief, enterprise investment schemes and employee share schemes to name a few.
The problem with tax however, is that the devil is in the detail and if the detail is not followed to the letter, the consequences can be significant. The tax you thought you had saved is now questioned. You will be potentially faced with a Revenue investigation, tight timescales to comply with, a finding that the scheme is invalid and a large tax bill with additional penalties.
The Government has recently pledged more funds to tackle tax avoidance schemes. This comes in the wake of heavy criticism made in the press of several well known firms over the level of corporation tax that they pay in the UK. However, companies and individuals should not be complacent. The Revenue is no stranger to tax investigations and reports suggest that these are likely to increase.
It goes without saying that it is always worth seeking specialist advice when it comes to tax and it is also sensible to review your or your company's tax arrangements regularly so that any potential problems come to light at the earliest opportunity. In this way, any damaging repercussions can be minimised and a potential professional negligence claim can be investigated before limitation becomes an issue.