HMRC use their ‘Spotlights’ publication as a means of communicating with tax payers. The latest edition is being used to highlight the different tax avoidance schemes which they will be likely to investigate as they continue to crackdown on such arrangements.

As such, HMRC has highlighted particular indicators which it has said taxpayers should be wary of. While one of these isn’t necessarily an indication that you are involved in a tax avoidance scheme, the presence of more of these indicators is likely to give HMRC greater cause to investigate.

The indicators include arrangements which are contrived or artificial or complex in comparison with the work carried out by you. Also, if there appears to be no risk to yourself but guaranteed returns then you should be asking questions. Another thing to be wary of is if you are required to agree to a confidentiality clause or if you are asked to pay money up front. You should also avoid any scheme which operates on a no win/no fee basis.

Often these schemes attempt to prove they are valid by stating that they have been vetted by an accountant or a lawyer but they do not provide their details. This should be a warning sign. It is basically a good idea to question every detail including the need for the use of offshore trusts, tax havens and tax exempt entities.

The number one rule is to be vigilant and remember that if it seems too good to be true then it probably is.

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