Accountancy Age reports that Michael Parkinson has dropped out of the totally artificial tax planning schemes organised by UK accountants Vantis.
The schemes involved four companies set up by Vantis in which people invested. The companies were then floated on the Jersey Stock Exchange (which is a farce if ever there was one), after which there prices mysteriously rose substantially. Not just a bit I add, but phenomenally. One such company was called Your Health. Once this price increase had happened (by some mysterious chance) the investors gave their shares to UK based charities and claimed gift aid tax relief on the value of the shares donated so generating substantial tax refunds for themselves whilst dumping wholly worthless investments on the charities in question who then had to write their value off as a cost in their accounts.
To put it nicely the whole scheme stunk and those behind it deserve to be drummed out of any professional organisation of which they are a member for unethical conduct whether or not it was legal.
Accountancy Age report that Parkinson's agent said:
He certainly put his money into Your Health to get tax relief. We were assured it was approved by the Revenue. The minute we realised it wasn't kosher we dropped [it]. We took the hit. We were very sensitive, extremely upset with the advice we got. It came up that the underlying charities were not over the moon about [the gifts].
The agent added that all the advice on the scheme came from Vantis.
To be fair Parkinson has done the bets he can to get out of sticky mess. But three things come out of this:
1) You can't tax plan and expect to come out smelling of roses, because you won't.
2) Greed and charity don't mix.
3) The accountancy profession continues to be dragged through the mud by the far too many within it who appear to have no conscience at all.
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100% SPOT ON! I don’t agree with every word you write but your underlying principles are admirable – not something I’ve said to many fellow accountants.
Nick James
Thanks Nick
Appreciated
Richard
Hello, tax avoidance schemes is an intersting concept which does appear by its very nature to have some moral implications. However as a lay person and not an accountant I recieved some advice approximately 7 years ago, the term avoidance was not used at this time. The advice by a large firm was to take out a partnership loan, pay the money into the company, get the tax relief and then borrow the money back from the company and pay of my mortgage. The revenue last yaer said this was illegal and I have now had to pay all the tax relief back and interest on top, plus suffered effectively the higher rate of interest on the business loan.
My question is this as an accountancy firm that gave the advice, morrally would you agree taht they have a responsibilty in bearing these additonal costs that I suffered. If so how would you recommend that I tackle this?
Any suggestions would be greatfully recieved.
Chris
This was widespread practice considered smart by the profession for some time. I never advised a client to do it, ever, and would not have done. It’s plainly abusive. But that was not on the horizon of these firms.
Your problem though is in proving they were negligent: if what they did was commonplace and understood to be legal if unethical at the time they offered their advice then they may well not be liable in law, even if the Revenue subsequently proved the practice wrong and backdated the application of the ruling (as they have the right to do, since it can date from the time they began their legal action, not when it concluded).
Of course they have a moral obligation to compensate you, but they showed themselves to be without moral conscience in recommending a sham in the first place. You may wish to consult a lawyer on this, but worry about throwing good money after bad: that’s never a good idea.
Richard