The report surveyed accountants, financial advisers and other tax specialists. Respondents felt there had been a ‘shift in the public and political mood’ towards avoidance but that there was still ‘ambiguity about what was deemed acceptable by HMRC and a grey area created where activity could be legal but still unacceptable’.
“There has been a huge amount of publicity in recent years surrounding HMRC’s investigations into evasion and aggressive tax avoidance. Since the financial crisis there has been a growing feeling that the super-wealthy are dodging their taxes unfairly and HMRC has been seen to take an increasingly politicised role in clamping down on bad behaviour. We’ve seen the tax authority challenging the arrangements of celebrity figures, and campaigns have raised awareness of HMRC’s powers to look into our tax affairs.
“As a result it has become a high profile issue, and this research suggests that there has been a marked impact on attitudes to aggressive tax avoidance schemes which push the push the envelope. People are now more likely to steer clear of schemes that skirt close to the boundaries of what is acceptable for fear that it may be challenged at a later date.
“It is right for HMRC to challenge aggressive tax avoidance when it breaks the spirit of the law, even if it didn’t technically break the letter. However, we should be careful that legitimate tax planning doesn’t become collateral damage. Simple things like putting money into an Isa are a way of ‘avoiding’ taxes like Capital Gains Tax (CGT). Thankfully, most people can recognise that an Isa is an approved structure designed to incentivise saving. But when it comes to something like Inheritance Tax (IHT), where families often use lifetime gifting allowances to mitigate IHT, some people might be put off entirely legitimate tax planning because they struggle to recognise what is and isn’t acceptable.
“Despite the high profile clampdown on evasion and aggressive tax avoidance, it is important to remember most tax planning techniques are entirely legitimate and the vast majority of insurance based schemes are mainstream, vanilla tools that the Revenue are comfortable with. The Government is focussed on tackling some of the more esoteric tax arrangements, but that should not but people off normal tax planning methods.”