Monday, June 02, 2014


BLOG 150

I was intrigued to read a comment in the Times earlier this month from Martin Taylor of Rebus Investment Solutions who the Times describes as “a claims management company representing people who believe they were mis-sold such schemes” [i.e. “complex tax avoidance schemes used by celebrities such as [Gary] Barlow, comedian Jimmy Carr and radio DJ, Chris Moyles”].  Mr Taylor is quoted as saying, “A lot of people in these schemes are normal Joe Public.  More than 10% of our clients are dentists targeted by tax avoidance schemes”.

I do not know either Rebus or Mr Taylor.  Indeed I did not know that there were claims management companies for tax avoidance schemes.  What intrigues me is how someone can be mis-sold a tax avoidance scheme.

Does the salesman say, “This is a great investment” and the dentist or whoever, buys it and suddenly discovers later that it enables him to seek to avoid tax too?  If so, would he not have invested if he had realised that it enabled him to try to avoid tax?  And, actually, no one is forced to seek to avoid tax.  If a person enters into a scheme or an investment that gives him the ability to seek to avoid tax, doing so has no tax effect whatsoever.  The individual has to make a claim for tax relief to HMRC – normally as part of his tax return.  I would not have thought it possible to unwittingly claim to reduce one’s tax bill.  And even if I am wrong, the individual could go to HMRC and say, “I am terribly sorry, I accidentally claimed this relief without realising it would reduce my tax bill; please ignore it”.  I am confident that HMRC would be willing to do just that.

Does the salesman say, “This is a tax avoidance scheme for the likes of Gary Barlow and Jimmy Carr.  The government and HMRC want to encourage Joe Public to avoid tax so, although they may attack Gary and Jimmy, you are perfectly safe because everyone else is allowed to avoid tax if their income is less than £XXX a year”?  If so, that certainly looks like mis-selling.  But it also looks like an extremely improbable scenario.

Or does the salesman say, “Although this is clearly a blatant device to seek to avoid tax, don’t worry it is bound to work.  Although we have a counsel’s opinion spelling out a lot of risk areas, lawyers just do this to frighten people.  The reality is that there is no risk whatsoever”?  If so, I again agree that is mis-selling.  But this also looks an unlikely scenario to me.

Or is it that people go into a tax avoidance scheme, not with their eyes wide open but at least knowing that they are seeking to avoid tax, that tax avoidance is generally frowned upon by other members of Joe Public, and that there is no guarantee that a tax scheme will work?  That looks to me a very likely scenario.  But it doesn’t look like mis-selling.  I suspect that there may be a degree of downplaying the risks involved.  I suspect that even though the risks were explained, a taxpayer may have been mesmerised by the desire to avoid tax and did not take those risks on board.  But that does not look like mis-selling to me.

I am also puzzled who one claims against.  Most tax schemes are marketed by limited companies.  I think it unlikely that most such companies have significant assets, as a person who is clever enough to devise tax schemes is surely clever enough not to leave his fees exposed to creditors.  Claiming against someone with no assets seems somewhat pointless to me.

So I am intrigued as to what people are claiming and why.  I hope that those mis-selling cases end up in court in a few years’ time, as it will be fascinating to discover the motivation of the claimants.



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