UK-based Rebus said investors must question why a number of the individuals and firms who were complicit in the creation of products now considered avoidance schemes by HMRC would now offer to “solve” a situation they originally created and continue to defend.
It added that it is also currently unclear whether investors who join such action groups will subsequently have to pay fees to both the promoter of the scheme and to the action group for the same work.
“Investors contemplating joining an action group should carefully consider the motives of the founders and potential conflicts that may already exist or may arise from membership before they sign up for yet more uncertainty in outcome and costs,” he said.
The company’s comments come as a number of action groups “fill the vacuum” created by the government body’s recent crackdown on “tax avoidance” schemes, spearheaded by its new-found abilities to issue accelerated payment notices and follower notices.
These notices require users of Revenue-defined avoidance schemes to pay contentious tax payments without appeal on the basis of existing court judgments previously made in similar cases.
Unclear motives
“A number of accounting and law firms, and IFAs, were engaged in designing and structuring the schemes now under attack, earning fees at the time,” Rebus added. “As a consequence, they may be well placed to understand the schemes, but are they without a conflict in relation to helping investors now these matters are under investigation?”
“Understandably, the original promoters have a transparently vested interest in defeating HMRC allegations of ‘tax avoidance’ on their products, but the motives of those who have benefitted from commissions and fees from the original launch are perhaps less clear.”
The company used the example of law firms originally appointed by intermediaries to provide advice on avoidance schemes being used by the same promoters to defend them from mis-selling claims to demonstrate its paradox.
HMRC’s crackdown on tax avoidance has generated a great deal of controversy in recent months, being labelled “unconstitutional” and “morally questionable” by senior industry figures.
The Revenue’s proposals to issue follower notices and accelerated payment notices received Royal Assent in July, and it issued its first demands last month.
