Tax Bite – Is Counsel’s opinion worth the paper it’s written on?

Counsel’s opinion in respect of tax planning can be invaluable in many circumstances – but you need to know why you are using it. We sometimes recommend seeking it when an area of tax law is unclear or subject to alternative interpretation. One key benefit of doing this is that it adds weight to a position taken in a tax return and can decrease the chance of HMRC enquiring into a tax return. Also the process of bouncing ideas off a good Tax Counsel can lead to improvement in an approach.

On the other hand many mass marketers of tax schemes present Counsel’s opinion as compelling evidence that their scheme will not be attacked. Expressions such as ‘Counsel has signed off on this’ are unhelpful here. Usually Counsel has done little more than express an opinion that he has been paid handsomely for. Also, in practical terms, there is very little comeback against the Tax Counsel concerned if the planning goes wrong.

In a recent issue of Taxation Magazine Jolyon Maugham (Tax Barrister) launched a scathing attack on certain unscrupulous members of his profession. I include some extracts below:

I have on my desk an Opinion – a piece of formal tax advice – from a prominent QC at the Tax Bar. In it, he expresses a view on the law that is so far removed from legal reality that I do not believe he can genuinely hold the view he says he has…….

But if those with a good reputation won’t sign off, some Houses will just go down the list until they find someone else who will…….

Most of my colleagues at the Revenue Bar act properly and scrupulously. But it saddens me that a number, whose names are well known to us all, do not. Their behaviour makes victims of the general body of taxpayers, whose tax take is reduced. It makes victims of those taxpayers to whom the schemes are mis-sold. And it besmirches my profession…..

Forbes Dawson’s Approach

At Forbes Dawson we generally shun mass marketed schemes and treat Counsels’ opinions in relation to these schemes with a healthy degree of scepticism (when we are asked to advise on them). We believe that tax advice or planning should be carried out on a bespoke basis and be commercially driven. In contrast to most mass marketed schemes we have an excellent record of avoiding HMRC enquiries (following full disclosure) and also of successfully defending our position on any enquiries that do arise.




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