The CIOT has published a press release which I would encourage all accountants to read. It is titled: CIOT President suggests there may be a need to target promoters of dodgy tax schemes under mis-selling laws.
I welcome this statement as I have had similar thoughts myself. Many tax schemes require clients to make some form of investment. In effect they are making a judgement call (often not based on full information) that the scheme will produce a beter return than a conventional investment.
We know that financial regulations preclude us from recommending specific regulated investments. This is part and parcel of evidencing our independence – hence the further restriction on recommending tied investment advisers. Our professional ethics, which apply to those of us who are members of CCAB professional bodies, require us to disclose to clients all commissions and introductory fees etc that we earn from investment advice or from any other activity.
These same ethical principles also apply when it comes to advising on tax schemes. Commissions etc are disclosable to clients and we have a duty to evidence our independence.
The issue that has started to exercise my mind is why there is no commensurate restriction on our ability to promote unregulated investments – which would include loans, mortgages and funding providers as well as tax schemes.
Patrick Stevens, in his statement yesterday, suggests that
“there may be a need to consider toughening up financial services mis-selling rules to attack the promoters and sellers of tax schemes that have no real prospect of working.”
In my view this is only a step away from requiring accountants and tax advisers to be as cautious when recommending tax schemes as when recommending investments.
What do you think?