Julian Miller & Tom Pangbourne assess the dangers of tax avoidance schemes
Claims against professional advisers in relation to their role in tax avoidance schemes are on the increase. This article examines the basis of such schemes, and why solicitors, barristers and other professionals involved in their implementation may be at risk.
Capital allowances tax reliefs
A number of capital allowance tax reliefs were introduced by the Labour government after 1997 which were designed to encourage investment in particular areas of British industry. This included investment in British films (under s 48 of the Finance (No 2) Act 1998), in technology start-ups (under
s 45 of the Capital Allowances Act 2001) and in research and development (under s 437 Capital Allowances Act 2001). Despite best intentions, inevitably this attracted not just those wishing to invest in the relevant sector but also high net worth individuals seeking to utilise the tax reliefs without any real interest in the underlying asset. This artificiality led to increased scrutiny by HMRC, the gradual restriction of the reliefs available, and the failure of several schemes.
Investment schemes
While