“Any tax planning is avoiding tax that might otherwise be paid if the planning had not occurred,” he said. “The point at which the tax planning becomes unacceptable can be difficult to pinpoint. Different people may have different views as to what is acceptable.”
“The world of evasion is simpler. The defendants are accused of deliberately misleading, and if found guilty the defendants will be sentenced as criminals.
“As far as investors are concerned, while their tax returns will no doubt be challenged as they will have been based on a fraud, they will not be criminals unless they were involved in the fraud.”
Increasing expectation
Watters pointed out that most investors of tax schemes enter them on the advice of their financial advisers.
“The case is an example of the need for care on the part of professional advisers before recommending any planning to their clients,” he said.
“In fact, certainly from the point of view of civil penalties, the defence of ‘I just did what my adviser recommended’ is no longer adequate.
“There is an increasing expectation that individual taxpayers must make serious efforts to satisfy themselves that any tax planning in which they engage is legitimate.”
In July, hundreds of investors took a film investment firm Ingenious to the High Court after it promoted a initiative accused of being a tax avoidance scheme.
