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

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