What about tax schemes?

All our planning is bespoke. Although we think we are as innovative and imaginative as anyone when it comes to tax planning, we don't devise or sell artificial "off-the-peg" schemes and we don't recommend them. This isn't because of any moral objection to tax avoidance: it's simply because we think that it is nowadays seldom in a client's best interests to get involved in highly artificial schemes. What is certain is that some artificial tax schemes will succeed and some will fail: the problem is to know in advance which is which. Every tax scheme worth its salt will of course come with a more or less favourable Counsel’s opinion, but unfortunately an Opinion is just that – the opinion of a tax barrister, however eminent: and it is a truism that the only opinion which really matters is that of the Court hearing the inevitable test case. If you can find a scheme provider who is offering a cast-iron copper-bottomed insurance-backed guarantee of success and who will reimburse you with all your tax, interest and fees should the scheme fail, snap his hand off – but we have yet to find such a paragon. Otherwise consider:

Can you live with the uncertainty of not knowing what your tax will be?
Are you prepared to suffer perhaps years of delay before you know whether a scheme works?
Can you afford to pay the interest which will be charged if the scheme is successfully challenged?
Do you want your card to be marked by HMRC as a serious tax avoider?
Are you prepared to commit to the scheme provider's costs with no guarantee of success (although part of the fee may be contingent on success, fully contingent fees are a rarity)?

Only if the answers are Yes to all of these should you go ahead. And if you do, good luck to you: we will keep our fingers crossed that you will have picked one of the schemes which work.

Although we do not devise or promote tax schemes, we are often asked to advise independently on the “pressure points” or areas of potential HMRC challenge of schemes which have been promoted by others. Our experience is that usually (but by no means always) a full unbiased explanation of the risks of the scheme leads to rejection of the scheme; at the least it ensures that any decision to participate is a fully informed one.

For more on tax avoidance and on the increasingly aggressive approach which HMRC are taking – and for a useful insight into what HMRC see as objectionable – follow the link to HMRC spotlights.