Despite being a specialist tax consultancy with dozens of in house tax advisers we chose not to offer such a service. The rationale was simple: Such schemes always carry risks. The promoters invariably underplay these and tap into the taxpayer's natural greed.
A worthwhile independent review can take many hours - obviously, given the inevitable complexity of such schemes and the need to review and consider all related paperwork including both the instructions to Counsel as well as the formal Opinion itself.
I was talking recently with the head of tax at another reputable tax consultancy. He shares many of my views about tax schemes. I was amused when he said he thought he could make a lot more money if he closed his eyes to the risks that pre-packaged tax schemes run. As it is, like any reputable tax adviser, he dutifully considers schemes that his clients purport to have an interest in. He goes through the paperwork carefully to ensure he understands the scheme sufficiently. He then explains the process, the hoped for benefits and the risks to the client, in words of one syllable. This, he tells me, invariably results in the client saying:
"Now I understand it properly, why would I want to go into a scheme like that?"And, just as I concluded a few years back, there is a limit as to how much you can charge a client in such circumstances for the time and effort involved in reviewing, checking and advising on the scheme - especially if the client decides not to proceed. This is one of the reasons that promoters pay high commissions. It is partly to compensate for all of the conversations and meetings that do NOT result in a client signing up for the scheme.
Within the Tax Advice Network the tax advisers are generally just as reluctant to review third party schemes brought to them by prospective clients. And yet they are all tax experts and well aware of many schemes relevant to their specific areas of expertise. Why would anyone less experienced feel able to provide an informed objective view of a pre-packaged scheme?
What do you do when a client wants your opinion of such schemes?
Previous relevant posts:
- "Raise the white flag" - Are tax schemes worth the effort any more?
- Give me pure tax evasion any day
- Discovery assessments issued re film schemes in 2003-04
- HMRC challenge sideways loss relief tax avoidance
- HMRC confuse tax avoidance and tax evasion again
- Beware of HMRC spotlights - EBTs now included
- Were you wasting time advocating this tax scheme?
- The beginning of the end for structured tax avoidance schemes?
- Bending vs breaking tax rules