David Bebber for The Times
Solicitors are facilitating “aggressive” and illegal tax avoidance schemes, the profession's watchdog said yesterday as it warned of a crackdown on sharp practices.
Legal profession regulators have become increasingly concerned at what they describe as Revenue & Customs “moving the goalposts” regarding schemes that are designed to be “tax efficient”.
The Solicitors Regulation Authority (SRA) pointed out that the General Anti-Abuse Rule 2013 was designed to cover schemes that "achieve a favourable tax result that parliament did not anticipate”.
Tax officials have vowed to take action against abusive tax avoidance schemes and start challenging arrangements that are not covered by the 2013 rules.
“We are concerned that some solicitors are facilitating tax avoidance schemes aggressively in ways that go beyond the intentions of parliament,” Paul Philip, the SRA’s chief executive, said.
Mr Philip said it was for HMRC and the courts to decide on the legality of tax avoidance schemes. However, he issued a strong warning that “where solicitors have advised on schemes that are judged to be illegal, the SRA will on the face of it see this as evidence of misconduct. It will also take action if it sees evidence of a lack of integrity in a solicitor’s dealings with HMRC, either directly or on behalf of clients.”
Tax law constantly evolves. That is a fact of life we have to live with
Yesterday the SRA issued an official warning notice reminding solicitors of the principles that they should uphold when advising clients on tax planning.
Tax specialists at City of London law firms welcomed the regulator’s warning and called on ministers to crack down on the sponsors of illegal schemes.
“Misselling is the real problem,” Christopher Groves, a partner at the City law firm Withers, said. “Clients come to us to take action against the people who have sold them the schemes, which are often little better than timeshare deals.”
Groves acknowledged that in some instances unscrupulous lawyers had been responsible for sponsoring illegal schemes. He also said that respected tax law practitioners did not find HMRC policy confusing.
“Tax law constantly evolves. That is a fact of life we have to live with,” he said.