Regulation  

Tax crackdown on middle class and their advisers

Mr Bull, senior tax partner for Baker Tilly, said there was a legitimate concern that prosecutors would pursue anyone to meet targets on tax evasion, even to the point of cracking down on sophisticated tax mitigation schemes and the advisers who recommended them.

Speaking as Keir Starmer, the director of public prosecutions outlined his plans to eradicate tax evasion, Mr Bull said: “What we have is an affluent compliance unit with targets to raise revenue.

“A very large group of middle England is suddenly going to be apprehensive about a metaphorical knock on the door from a tax inspector who has targets to meet.

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“Many different groups in society have had this approach, such as benefit fraudsters, and now it’s the turn of the people who don’t feel affluent but are defined as affluent.”

Gary Richards, tax partner for law firm Berwin Leighton Paisner, said the approach, outlined in a speech by Mr Starmer in conjunction with HM Revenue & Customs, would in some areas require changes in law.

He said: “Undoubtedly some tax planning is viewed with disfavour but if it doesn’t breach existing criminal law then they will need to change the law to use criminal powers.”

Mr Richards suggested investors would now seek more information from advisers who, in turn, would require more information from schemes they recommend to ensure they do not stray from avoidance to evasion.

Advisers have also warned that the approach is affecting the way they operate.

Adrian Pickersgill, director of West Midlands-based Chatfield Private Clients, said: “The general theme is making everybody pay tax, even legitimate routes of tax planning seem to be called into question.

“It is very difficult for any tax adviser to plan in this environment.”

Mr Starmer said the the focus on tax evasion has been ramped up by merging the revenue and customs prosecutions office into the Crown Prosecution Service and a fivefold increase in the amount of tax evasion prosecutions.