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Taxman and advertising watchdog get tough on dubious tax avoidance schemes

A firm which claimed to be able to reduce stamp duty bills by at least 60pc has been told to remove its adverts - PA
A firm which claimed to be able to reduce stamp duty bills by at least 60pc has been told to remove its adverts - PA

The taxman has teamed up with the advertising watchdog to crack down on companies touting schemes to avoid tax.

The complicated arrangements, which often involve a bewildering array of loans or shell companies, offer to limit their user’s liability for income tax, national insurance or stamp duty. HM Revenue & Customs is active in challenging them, saying these “tax avoidance” plans aren’t likely to hold up to scrutiny.

But now it seems to be trying out a new tactic. Rather than attempting to close the schemes down, HMRC is reporting firms that make spurious claims about tax mitigation to the Advertising Standards Authority (ASA).

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The watchdog yesterday published its ruling on a company called CDP Tax and Wealth, which trades under the name Fiducia Wealth and Tax. The firm’s website claimed the scheme would “save you a minimum of 60pc” on stamp duty and that the company was endorsed by the Solicitors Regulation Authority.

The ASA ruled that both these claims should be removed.

Telegraph Moneyfirst warned of the dangers of the scheme offered by CDP Corporate in July 2016. Last year this newspaper reported a reader had been left with a bill of £75,000 from HMRC after using this failed arrangement.

The company is now in liquidation, but was owned by the same group of people as CDP Tax and Wealth.

The company insisted its new scheme was based on "specialist tax and legal advice" and said HMRC has requested information relating to a "small number of clients", with which it has complied.

A spokesman added the firm would comply with the ASA ruling, and its website has been taken down while changes were made.

A statement read: "The wording of that ad was never intended to and could never explain the full detail of the planning concerned. Everyone who made contact with us having seen it was made completely aware of the possible element of risk involved and that was also made clear in all our relevant literature."

Stamp duty dodge
Stamp duty dodge

Dan Neidle, a tax partner at Clifford Chance, the law firm, said he had also reported Fiducia to the ASA after being shocked when he saw the advert. He described the firm’s offer as “nothing short of a scam”.

He added: “Schemes like this have essentially no chance of working and I think all responsible tax practitioners would say the same.”

Jessica McLellan, a specialist at Blick Rothenberg, the accountants, said HMRC is becoming “increasingly sophisticated” in challenging scheme promoters. “By involving other regulatory bodies, they are accessing a wider range of punitive powers,” she added. “This is a positive move by HMRC to impact the commercial activities of avoidance promoters in an innovative way.”

HMRC said most schemes offering to reduce your tax liability don’t work and that using the ASA was just one of the weapons at its disposal. A spokesman said the taxman has reported three “avoidance promoters”.

He added: “We are delighted that they have agreed the adverts were misleading in all three cases. These rulings set precedents, so other avoidance promoters can’t make the same claims about similar arrangements.”

Last month the ASA ruled that a Surrey-based accountancy firm called Williams Gordon could no longer claim contractors could “take home up to 92pc of your pay” or that its arrangements were “legally robust”.

However, yesterday the firm’s site still included the initial claim, along with further claims about the compliance of the scheme. Mark Turner, of Williams Gordon, told Telegraph Money this was an oversight and was in the process of being removed.

The ASA has a compliance team which works with firms subject to a ruling to ensure they can alter any advertising within a reasonable time frame. It has the power to report firms to Trading Standards which can levy fines.

Last year HMRC reported another firm, Knight Wolffe, for claiming users of its income trust scheme could pay 80pc less tax. This complaint was also upheld by the ASA.

The Fiducia mentioned here is in no way connected with Colchester-based Fiducia Wealth Management