In other words, many accountants have previously been encouraged to WASTE a load of their time trying to persuade clients to undertake transactions that neither party really understands. The hoped for tax savings, that were never guaranteed anyway, are now definitely unavailable. And the promoter thinks that clients will be willing to devote more time to hearing about more such schemes that could equally be blocked at short notice.
"I am sorry to have to report to you that an announcement has been made today to block the [scheme] income tax strategy". [We've been found out]
"HMRC has extended the sideways loss relief rules to trades, professions and vocations. In addition, a purpose test will now be applied in the future to this kind of structure". [We'll have to find something new or go out of business as promoters]
"Naturally, this is extremely disappointing as the level of interest [in the scheme] was extremely high. For those accountants that have referred clients for [the scheme], can you please now liaise with them?" [We know the clients you talked to were tempted by the hope of sizeable tax savings that are definitely no longer available. If you've been spending time advocating this scheme to clients you'll have to tell them that it's been blocked. ie: Please spend more non billable time talking about schemes that many clients would never have done anyway]
"We could not explain to clients upfront exactly how this worked because of financial services restrictions." [Just to confirm, we didn't expect you to understand what you were encouraging your clients to do. Let's just all pretend that there's a good reason to justify this.]
"The moral of the story is to act early or be disappointed" [Hmmm. Actually the moral of the story is that unless you rush in next time without knowing what you're doing, you could find that future opportunities, that may or may not really enable your clients to avoid tax, are blocked. Don't worry that such an approach wouldn't be professionally justifiable.]
"It is clear that those clients that placed trust in their accountants, [the promoters]and the process have been able to exercise the control and choice over their financial and taxation affairs". [Hmmm. It is clear that clients who placed blind trust in their accountants, who were seduced by the prospective commissions from a scheme they didn't understand, have been able to put funds at risk and may yet be the subject of a long lasting tax investigation].
"I'll be in touch with you shortly regarding the final opportunity for employee benefit trust implementation before the budget". [We have another idea that we hope to persuade you isn't blocked by the recent anti-EBT avoidance announcements. We hope you'll spend time trying to understand it and advocating it your clients so that they go ahead before it's definitely blocked in the Budget or in another announcement like happened yesterday. By the way, don't tell your clients that HMRC will be challenging it anyway.]
Indeed the promoter (for whom I will not provide any publicity) seems to be suggesting that accountants should move faster to persuade clients to enter into any future such schemes that his company promotes - before they get blocked - and presumably without first ensuring that the chances of success are sufficiently high to warrant everyone's time and effort.
I would add also that the Financial Secretary's announcement includes the (perhaps inevitable statement) that:
"The Government does not accept that these arrangements have the effect that is sought, but to remove any doubt, and to prevent scheme providers continuing to devise and operate even more contrived schemes that seek to challenge the sideways loss relief rules, I am announcing prompt and decisive action to protect the Exchequer."Anyway - as ever - you pays your money and takes your chances. I remain of the view that there are easier and less potentially problematic ways to both help clients and to earn good fees than to promote structured avoidance schemes.