Stephen Herring and Robin Hutton of BDO say the government stance on avoidance is creating a moral minefield

Tax advisers now have an additional perspective to consider when discussing the tax consequences of transactions being undertaken with their clients. Not only do they have to make sure they advise their clients in relation to the legislation, tax case law and HMRC’s attitude and practice with regard to a particular approach, not to mention whether the Courts are likely are to agree, but they also need to ponder the public perception of a transaction, particularly for their listed and other high profile clients.

Everyone in tax knows the judgment in the Duke of Westminster’s case in which Lord Tomlin stated ‘...every man is entitled to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be’. Of course, the Courts have since evolved the position, effectively limiting the taxpayers’ flexibility to stretch the wording of legislation to achieve a favourable tax result, particularly in the judgments in Ramsey and Furniss v Dawson and, more recently, ‘Scottish Provident’.

Applying

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