High Court backs HMRC sting on tax planning advice

Advisers rolling out tax planning guidance to corporates will find themselves
under the cosh from the taxman after a landmark High Court ruling this week.

The ruling in a case brought by insurance giant Prudential will mean advice
given by accountants on tax planning schemes will have to be disclosed
automatically to HMRC, and not withheld on the grounds that it is legally
privileged information.

The decision means accountants will not enjoy the protection enjoyed by the
legal profession, which allows their advice to be kept confidential.

Law firm McGrigors believed the ruling meant HMRC could continue to
aggressively challenge tax planning schemes, but the decision could push
corporates into more inventive tax planning.

Jason Collins, partner at McGrigors, said: “Taxpayers are becoming
increasingly reluctant to discuss their tax affairs openly with accountants
because of HMRC’s far-reaching powers to seize correspondence.”

“This trend is now likely to continue, and may ironically lead to greater

The victory is the latest in a series of developments which have
seen the taxman making a concerted effort to nip tax evasion among
in the bud.

This ruling will come as a big disappointment to the accountancy firms and I
expect that leave to appeal will be sought,” added Collins.

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