Naming tax avoidance scheme promoters risky, warn tax heads

NAMING AND SHAMING PROMOTERS of tax avoidance schemes may not have the desired deterrent effect institute tax heads have warned the House of Lords Economic Affairs Committee.

Instead of discouraging boutiques from marketing schemes – and clients approaching them – a name-and-shame programme may have the opposite effect, ICAEW head of tax faculty Frank Haskew told the committee.

Boutique promoters are unlikely to feel shame in any case, ICAS director of taxation Elspeth Orcharton said, with such firms often disappearing and reinventing themselves and continuing to run contrived schemes.

Nevertheless, Haskew noted that in the ICAEW’s experience, the amount of schemes in the market has diminished over the last decade, a view corroborated in an earlier session by BP head of tax John Bartlett.

CBI head of tax and fiscal policy Richard Woolhouse was particularly scathing of the media and political coverage avoidance has received in recent months.

“We’re hauling businesses through the court of public opinion for paying low taxes for perfectly valid, legal reasons,” he said.

Any changes to the rules should be introduced incrementally, ACCA head of tax Chas Roy-Chowdhury said. Orcharton added government proposals to bar tax-avoiding organistions from government contracts could handicap UK businesses, with foreign companies potentially gaining an advantage over British counterparts.

“Most businesses don’t have time to bother with avoidance schemes,” Roy-Chowdhury said. “They’re too busy trying to comply.”