Regulation  

Tax avoidance scandals put people off tax planning

Tax avoidance scandals put people off tax planning

Fifteen per cent of advisers say clients have been put-off legitimate tax planning because of bad press on tax evasion and aggressive tax avoidance, a survey by Old Mutual Wealth found.

Although the majority of 219 British financial advisers polled by Old Mutual Wealth last month said their clients are still willing to use legitimate measures, some have seen a portion of their clients turn away from this because of high-profile scandals.

More than one in 10 advisers have seen up to 20 per cent of their clients put-off legitimate tax planning, while 3 per cent said 20 to 40 per cent had been dissuaded from this.

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Rachael Griffin, financial planning expert at Old Mutual Wealth, said: “Efficient tax planning is good common sense and not something to be ashamed of.

“Those that save for the future and build wealth for themselves and their families should not be put off planning because others choose to abuse the system.

“But this data shows there is a real risk that normal people feel stigmatised or pressured to pay more tax than is necessary.

“Normal tax-planning tools such as trusts and potentially exempt transfers are permissible under UK tax law and there is no issue with using them to manage personal tax liabilities.

“These tools are designed to allow people to pass on their accumulated wealth to their children, grandchildren or other friends and family without giving almost half of it to the tax-man.”

HM Revenue & Customs has seen a surge in returns from investigations into the tax affairs of high net worth individuals, according to figures from Pinsent Masons released in March.

The international law firm found that over the past year, HMRC has returned a yield of £29 for every £1 spent on investigations into wealthy earners.

Adviser View

Steve Carlson, a chartered financial planner with Cardiff-based Carlson Wealth Management, said: “When I sit down with a client and do legitimate tax planning I have never had one of them who has raised a concern and that has not changed but there will be plenty of people who have an opinion about what other people do.”