One to avoid

I was shocked to note that the wives of two Vantis tax directors are accused of involvement in their husbands’ dealings. These involve the alleged organisation of a multi-million pound tax scheme that took advantage of the legislation providing tax relief on the donation of shares to charities. The directors and their wives have all appeared in court and face prosecution by HMRC for “cheating her Majesty and the public revenue”.

Other scheme promoters will suggest this is simply an HMRC tactic intended to scare people away from the arrangement of aggressive tax schemes. They will argue that HMRC are exceeding their powers and that this is a one-off never-to-be-repeated case.

Now, it just so happens that I used to work with two of the accused when we were all at WJB Chiltern (which is now owned by BDO).

Although I haven’t spoken to either of them for some years, I knew them well, and in those days the idea of their wives being involved in their tax advisory affairs would have been fanciful.

I should stress that I can pass no comment on what may have happened in the lead up to this case.

However, I can make some reasonable assumptions. Past experience suggests that they would only have proceeded with promotion of this scheme if they had first secured a solid counsel’s opinion. Unlike some promoters of schemes I would expect that Vantis disclosed everything necessary for such an opinion to be worthwhile and sufficient for them to advise clients by reference thereto.

Counsels’ opinions are routinely sought and highlighted by the promoters of schemes to evidence the legality of the plans and, until now, to ensure that the promoters and those involved should be safe from prosecution for tax evasion.

Indeed the two Vantis directors always seemed to know more about the key legal issues relevant to tax schemes on which they might advise than many promoters I have encountered over the years.

So, unless they have changed, they cannot be dismissed as loose cannons, novices or crooks who recklessly promoted a fraudulent scheme. That certainly wasn’t their style when I knew them.

Other promoters of structured tax avoidance schemes will attempt to distinguish their schemes as not being so aggressive as to ever warrant such a prosecution. If only we could all be so certain of the future.

I would imagine that the Vantis directors would have said much the same thing when they first started promoting the scheme to clients back in 2004.

I have long stressed the need to fully appreciate and understand all related risks and downsides when considering structured tax avoidance schemes. Too many people overlook or dismiss such risks.

Now there’s another ­ that of one’s spouse being implicated in alleged criminal activity if HMRC were to mount a prosecution.

I would agree it’s remote but it’s no longer impossible.

Mark Lee is chairman of TaxAdviceNetwork.co.uk