THE PROMOTION and mis-selling of tax schemes with no real prospect of working should be challenged, according to the president of the Chartered Institute of Taxation.
Speaking at the CIoT’s annual parliamentary reception, Patrick Stevens said rules governing the sale of artificial schemes needed to be treated in the same way as the financial services mis-selling rules. However, he stopped short of suggesting more legislation was required.
He said: “We need to consider the nature of the schemes that claim to wipe out income tax. Many people in my profession believe that most of them simply do not work, and indeed that they shouldn’t work.
“If we built on the financial services mis-selling rules, they would attack the promoters and sellers of schemes that have no real prospect of working – who are the ones who really make the money from such arrangements.”
He went on to add that morality and parliament’s intention “only gets us so far”, and that “fundamentally, tax bills must be based on the law, not on a possibly arbitrary view or decision”.
A general anti-abuse rule (GAAR) is currently under consultation in order to tackle avoidance schemes that go against the intention of existing tax law.