In the controversy over the Paradise Papers, questions have been raised about the role, responsibilities and liability of professionals in the creation and facilitation of tax avoidance schemes.
There is, or certainly should be, a strict ethical dividing line between tax avoidance and tax evasion.
If a client asks a solicitor for advice which involves breaking the law – which amounts to evasion – a solicitor must not give that advice or arrange a transaction which helps the client evade tax.
New criminal offences are being rolled out by HMRC which will criminalise professionals involved in tax evasion. They include the somewhat convoluted “failure to prevent the facilitation of tax evasion”, which came into force in September.
These offences are not retrospective.
“However, that is not to say they won’t make a difference,” says Jessica Parker, a partner at the solicitors Corker Binning. “They reflect the rising tide of moral opprobrium directed at the offshore tax industry.
“Advisors will now tread extremely carefully so as to avoid falling onto the wrong side of the notoriously blurred line between legitimate tax avoidance and illegitimate tax evasion.”