{"id":26692,"date":"2014-11-05T09:44:13","date_gmt":"2014-11-05T09:44:13","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=26692"},"modified":"2014-11-05T09:44:13","modified_gmt":"2014-11-05T09:44:13","slug":"badging-tax-risk","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2014\/11\/05\/badging-tax-risk\/","title":{"rendered":"Badging tax risk"},"content":{"rendered":"

Jolyon Maugham has made another interesting contribution to tax debate on his blog<\/a>, using the above title. I suspect this is in advance of the Hardman Lecture he is giving at the\u00a0Institute of Chartered Accountants in England and Wales next week, which I will not, unfortunately, be able to attend.<\/p>\n

What Jolyon is arguing is that a taxpayer \u00a0should be able to identify at least twelve \u00a0factors in a potential transaction recommended to them by a tax adviser that might suggest that the arrangement is inherently risky for tax purposes. \u00a0I'm not going to reiterate the list here, but think that some of the comments on his blog are relevant, and in particular note what Martin Hearson has to say, \u00a0which is that many of the questions are too complex for a layperson to answer, and in themselves were precisely what they asked the professional adviser \u00a0they engaged to consider. \u00a0This is, I think, because Jolyon has concentrated too heavily upon the nature of the transaction that is being looked at, and not about the environment in which advice is being offered.<\/p>\n

I would add to Jolyon's list of questions in that case, with \u00a0my focus being upon the tax adviser themselves, because this is the person whose \u00a0behaviour should signal most tax risk to an astute \u00a0taxpayer considering using their services. My additions to Jolyon's list would be, as a result, as follows:<\/p>\n

Tax Adviser Risk.\u00a0<\/strong>All of us \u00a0have inbuilt risk assessment tools based upon our assessment of the people that we meet and how they behave. \u00a0We may not all be tax experts but we do have \u00a0the ability to \u00a0appraise those who claim to have that status. Just as some people in life are more risk averse than others, \u00a0whilst some positively relish taking an aggressive stance on most issues, the same is also true of tax advisers. The following questions are an appropriate part of any tax \u00a0risk appraisal in that\u00a0case.<\/p>\n

13. Is the \u00a0tax adviser you are talking to a member of a recognised professional body? \u00a0In other words, are they a barrister, a solicitor, a chartered or chartered certified accountant \u00a0or a member of the Chartered Institute of Tax? If not there may well be \u00a0considerably increased risk involved in taking \u00a0advice from them, including the fact that they may not be insured to provide that \u00a0advice in the first place so that you will have no effective recourse against them \u00a0if anything goes wrong.<\/p>\n

14. Is the tax adviser \u00a0using aggressive language with regard to tax, and is their general position with regard to HM Revenue & Customs one of apparent hostility? \u00a0If so you need to have doubt as to whether they are being truly objective with regard to the advice they provide. A tax \u00a0adviser can, and should, have an opinion on various taxation issues, but if sentiment clouds their judgement they may not be appraising tax risk objectively, and that can have an impact on your own situation.<\/p>\n

15. Does the tax adviser appear organised, tidy, methodical and diligent with all their paperwork? This is \u00a0an important trait in a tax adviser, because getting everything documented correctly is fundamental to getting anyone's tax affairs right. \u00a0If they cannot apparently achieve this themselves, there is little chance that they will deliver for you, and your tax risk will be increased as a result.<\/p>\n

16. It may be hard to \u00a0appraise a person's opinion on complex tax advice, \u00a0and on complex tax avoidance schemes, but in that case ask them questions about something that is quite straightforward to do with your affairs, such as how and when you might owe tax, or if a particular type of income is taxable, or what you should do with regard to the children's tax affairs (if you have any). If \u00a0they can provide you with straightforward, unambiguous \u00a0advice in plain language that you can easily comprehend then you have some basis for believing that when they talk about more complex issues they are at least trying to do their best to explain it in terms that you might understand. \u00a0If you cannot understand their simple explanations, it is best to steer clear of their more complex ones.<\/p>\n

17. Do you trust this person? Apply the 'would you buy a second-hand car from this person?' test. If you wouldn't \u00a0buy a \u00a0car from them definitely do not buy \u00a0tax advice from.<\/p>\n

These are questions I think anyone could understand.<\/p>\n

 <\/p>\n

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Jolyon Maugham has made another interesting contribution to tax debate on his blog, using the above title. I suspect this is in advance of the
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