PracticeAccounting FirmsViewpoint: HMRC’s carousel initiative blurs boundaries

Viewpoint: HMRC's carousel initiative blurs boundaries

Move on carousel fraud is a further step in the blurring of the line between avoidance and evasion

alex hawkes

Opinion by Alex Hawkes

What is the significance of HM Revenue & Customs’ initiative to get
advisers to condemn carousel fraud?

In one sense, it may seem like a tedious announcement. Tax advisers, who by
definition help to limit client’s tax bills without transgressing the law, are
being asked assert that clients should not transgress the law. There’s nothing
new in that, and when the Big Four made their statement, it was hardly covered
by any of the media for that very reason.

On that basis, that advisers are clearly not involved, one might then ask the
question – why is HMRC doing this? It won’t achieve anything, and smacks of
desperation.

But there is something a little bit more interesting going on here. HMRC says
that  firms may at least be working with clients involved in the frauds. It
feels that banking and accounting professionals may, unwittingly or otherwise,
be providing a support network to fraudsters.

That opens up a slightly more worrying prospect. Should firms be concerned
that HMRC might find a legal avenue to clobber them if they have worked
unwittingly for the fraudsters? Have you done enough to ensure that you knew
what your clients do? If not, perhaps you should pick up the bill.

That seems a very real prospect, and until we know more about what HMRC is
getting at on this issue, and what evidence it has, we will remain in the dark.

It would not be a new development in some respects, as the Bond House case
has shown.

On another level still, the line between evasion and avoidance seems to have
decisively broken down.

David Varney wrote to firms and institutes saying: ‘A small number of tax
advisers mistakenly see carousel fraud as some form of clever tax planning
rather than a dishonest and criminal exploitation of the tax system.’

Advisers, if they have made those points, are doing the profession no
favours. And the Revenue, in targeting honest advisers to catch dishonest
people, will only blur that line even further.

Related Articles

KPMG replaces PwC as Croda auditor

Accounting Firms KPMG replaces PwC as Croda auditor

3d Emma Smith, Managing Editor
Where is your next client coming from?

Accounting Firms Where is your next client coming from?

5d James Noble, Propero Partners
Specialist VAT service provider joins MHA

Accounting Firms Specialist VAT service provider joins MHA

5d Austin Clark, Reporter
Top 50+50: Big Four hold steady, shake-up outside Top 20

Accounting Firms Top 50+50: Big Four hold steady, shake-up outside Top 20

3w Emma Smith, Managing Editor
Top 50+50: Revenue rises spark rankings shake-up

Accounting Firms Top 50+50: Revenue rises spark rankings shake-up

3w Emma Smith, Managing Editor
Grant Thornton expands financial services regulatory team

Accounting Firms Grant Thornton expands financial services regulatory team

2w Austin Clark, Reporter
FRC closes investigation into PwC over Barclays compliance

Accounting Firms FRC closes investigation into PwC over Barclays compliance

2w Alia Shoaib, Reporter
Top 50+50: Firms fall short on diversity

Accounting Firms Top 50+50: Firms fall short on diversity

2w Alia Shoaib, Reporter