We are constantly reminded that legislation is required to counter abusive tax arrangements designed to secure tax advantages that Parliament did not intend. There is an implied circularity about this assertion, as presumably the DOTAS, GAAR and other counter abuse rules will, in themselves, invite further, ingenious schemes to counter the counter-abuse regulations?
When does intelligently considered tax planning become abusive?
On the one hand we have courts admonishing firms who fail to provide adequate tax advice, and on the other, penalties if the advice goes too far. The debate about the dividing line, or more accurately, the grey area, separating the two goes on…
Meanwhile, at the coal face, practitioners are required to make choices.
The Finance Act 2014 has now received Royal Assent (17 July) and practitioners who have clients affected by this debate may want to read Chapter 3 of the Act, sections 219 et al: circumstances in which an accelerated payment notice may be given.
It is likely that from this month affected clients, who have been challenged by HMRC, will receive a notice to pay any tax deferred by the scheme. They will have 90 days to pay and will face penalties if payment is delayed.
From the clients’ perspective the tax planning arena must appear to be incomprehensible. The press are quick to take up arms against firms that avoid tax by availing themselves of reliefs that Parliament has created. Are we really moving towards a moral imperative to contribute to the national purse rather than a legal duty?
The debate will no doubt continue and in the meantime tax professionals will wrestle with the degree to which their advice strays from acceptable tax advice into the dizzy realms of abusive tax avoidance.