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I was intrigued by the discussion on tax filing positions in the recent Upper Tribunal decision in Booth. In a world where things are rarely black and white how certain do we have to be before we can advise a client to file in a particular way? I remember years ago somebody saying that, although there might only be a 20% chance of a particular deduction being allowed, if you don’t claim it in the first place the chances are zero. The logic of that cannot be denied but I cannot see many advisers following the same course now.
Readers who remember the appearance of the heads of tax policy at the big four before the House of Commons’ Public Accounts Committee in January 2013 (tinyurl.com/pacjan2013) will recall how even a comment that success rate had to be estimated at over 50% before filing, was open to misinterpretation when the chair said: ‘So for half the schemes that are included and filed in tax returns there is a risk that they could be proved, later down the line, to be unlawful.’
Professional conduct in relation to taxation (PCRT) and HMRC’s standard for tax agents both require tax planning to be based on a ‘credible view of the law’, but that is undefined and ultimately is left to the individual advisers’ judgment. Very large companies are now subject to the uncertain tax treatment regime: that is not quite the same test, but clearly there is some overlap. The Keith Committee’s proposal that taxpayers must disclose when they had given themselves the ‘benefit of the doubt’ never got anywhere, but we have probably reached more or less the same place by a different route. Judgment has never been a more important attribute for a tax adviser.
If you do one thing...
Read the latest update to HMRC’s trust registration guidance – see tinyurl.com/hmrctrsgui.
