PCG: Stay clear of avoidance schemes

Monday 14 July 2014

As more and more celebrity names are linked to the Liberty tax scheme, the PCG is advising contractors, limited companies and sole traders to stay away from programmes designed to wrongfully avoid levies.

Around 1,600 people have now been named as part of the £1.2 billion Liberty tax avoidance scheme, including members of the Arctic Monkeys, Katie Melua and Gary Barlow.

While it has been out of operation since 2009 when the government closed the loophole it exploited, HM Revenue and Customs (HMRC) is yet to challenge it in court and the names of those linked to the scheme are only now coming to light.

It is believed that when it goes to court, it will be found to be illegal and celebrities will have to pay back millions of pounds to HMRC.

The PCG is now warning self-employed professionals to stay away from tax avoidance schemes if they want to stay on the right side of the law.

Chris Bryce, PCG chief executive, stated: "We would advise anyone looking at ways to reduce their tax burden to think twice before investing in one of these schemes and to seek independent advice if you feel you may have already invested in one.

"Looking at the stories relating to the Liberty tax strategy in the papers today, it is clearly no longer an excuse to say that an investment was made at the advice of an accountant or financial adviser. HMRC is clamping down on anything it deems to contravene the rules and the risk is now far outweighing any potential gains that could be made."

Mr Bryce added that with new Treasury rules being brought in this month making those who have invested in a scheme judged to be uncompliant with the rules pay back any disputed tax before a hearing, there is no room for maneuver when it comes to settling with HMRC.

"With this in mind, PCG is advising self-employed people to steer clear of schemes such as the one," he said.

Accountancy services will advise self-employed professionals about their legal options when it comes to tax planning and will ensure that the right amount is paid to HMRC.

Persons with questions about the new rules should contact their accountant or other professionals to ensure they understand their obligations to HMRC.

The pressure to comply is made greater by new proposals that will allow HMRC to fine tax advisers up to £1 million if they don't make it clear on their website when they are being monitored by HMRC. Sanctions will also apply if prospective clients aren't made aware of monitoring through marketing material and other communications.

Clients of promoters of tax planning schemes will be issued a reference number, which will need to be entered on tax returns and other material sent to HMRC.

Playing by the rules is in the best interests of all concerned, as the celebrities linked to the Liberty tax planning scheme are all finding out.

Indeed, stars are being asked to settle large sums with HMRC, including Anne Robinson who is believed to have paid £4 million into the scheme. Individuals will not get their money back unless Liberty Tax manages to defeat HMRC in court.

By Victoria McDonnell

Get in touch

Please select your type of enquiry:

Brookson on Twitter