Advisers should fear tax witch hunts

While they may not relish their tax bill most accept the amount taken is in exchange for a state pension, medical help from the National Health Service and financial assistance if they find themselves unable to work.

Tax is a form of insurance for the nation and also a way of making sure the country can continue to offer free basic education to children, a police force plus jails to hold our criminals.

Yet if you ask the average man on the street would he be happy to pay more tax, I am pretty sure that most would say “No.”

As the demand for financial advice shows, those who can afford it would rather pay cash to an excellent financial adviser who doesn’t just push product but is capable of looking at the current tax regime and suggesting ways to make sure they don’t pay more tax than they have to.

Very few individuals who have spent a lifetime working and saving and as a result have just gone over the inheritance tax threshold want to see the fruits of their labours stretched across the nation’s services.

Most people accept they must pay tax on their income while they are earning it but would much rather see any pot left over when they die go to making a loved one smile after their death.

Yet when you ask the same individuals if they think it is right for super-rich celebrities and those leading our nation to squirrel cash away in schemes or overseas accounts to avoid a bigger tax bill, they will answer “No.”

This week HMRC won a three-year battle with a film scheme that was used by celebrities and sports stars to avoid tax.

The Supreme Court dismissed an appeal from Eclipse 35 brought by its creator Future Capital Partners and 287 investors, who reportedly include former football managers Sir Alex Ferguson and Sven-Goran Eriksson.

Those who used the scheme now face paying around £117m in unpaid tax and penalties, according to figures from HMRC in December 2013.

The average man on the street failed to burst into tears following this news.

Earlier this week the government also created a taskforce to investigate allegations of offshore tax avoidance, which emerged from the Panama Papers leak.

Prime minister David Cameron announced £10m has been allocated to support the taskforce, which will investigate leads on tax-dodging from the Panama Papers.

Mr Cameron also published his tax returns in a bid to calm the public uproar following news he benefitted from his late father’s offshore investment trust.

Much disgust was expressed online about the nation’s prime minister’s father wanting to make sure more of the cash went to his son rather than being swallowed up in inheritance tax.

Today MPs have slated HM Revenue & Custom’s attempts to fight tax fraud, stating the number of criminal prosecutions for offshore tax evasion is still “woefully inadequate”.

MPs are baying for individuals’ blood.

As a result of these witch hunts we are heading towards puritanical personal taxation and the tax man’s finger of blame pointing at financial advisers.

Tax witch hunts prove popular with the general electorate as they perceive not everybody is paying their fair share for keeping many of the things we take for granted in the UK going.

My fear is, as a result of these witch hunts, we are heading towards puritanical personal taxation and the tax man’s finger of blame pointing at financial advisers.

Rather than a crackdown on just schemes that were blatantly set up to disguise the amount of income an individual earns, could we end up ruling out any scheme that minimises say inheritance tax bill, for example?

What is acceptable is often dictated by the state of the nation.

How unhappy the average man on the street is about the super-rich not paying the same proportion of tax from his income as they do, depends on how happy the average man is in his day-to-day life.

But are tax planning schemes the reason why so many of the things our tax is supposed to pay for seem to struggle to deliver what they used to these days and the man on the street is unhappy?

What is undeniably wrong is companies that make lots of cash in the UK that contribute virtually nothing to the nation’s collective coffers or making their customer’s lives better.

Rather than pursue a puritanical approach to personal taxation that proves difficult to police, isn’t it a tougher approach to corporate taxation that is more urgently needed?

The latter approach would mean advisers can get back to their day jobs without fearing the tax man’s finger accusingly pointing towards them in the future.