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ICAEW chief denounces promoters of abusive tax avoidance schemes

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There is ‘no place’ in the accountancy profession for the creation or maintenance of tax avoidance schemes such as those detailed in the recent ‘Secrets of the tax avoiders’ series published in The Times, the CEO of the Institute of Chartered Accountants in England and Wales has declared.

Michael Izza noted that the Times had exposed how ‘some of the wealthiest in society … are able to take advantage of schemes that apparently reduce their tax obligations to virtually zero’.

Writing on his Moorgate Place blog, Izza said: ‘As ICAEW chartered accountants, our code of ethics, which is the foundation for how we behave, is clear that we must do nothing to bring our profession into disrepute. Any members involved in aggressive tax planning through the sorts of schemes highlighted by The Times are doing exactly that, and are risking the reputation of the vast majority of our members who provide valuable and honest support to businesses and individuals and who want nothing to do with such schemes.’

His remarks reflect growing concern among ‘mainstream’ accountants and tax advisers that their reputation has been diminished by an aggressive tax avoidance ‘industry’ that defends arrangements clearly designed to undermine the will of Parliament on the grounds that they are not illegal evasion.

Patrick Stevens, President of the Chartered Institute of Taxation, spoke out last week against ‘pushy salesmen persuading people to buy schemes that are probably too good to be true’. He suggested that an extension of financial services mis-selling rules to ‘attack the promoters and sellers of schemes that have no real prospect of working’ could lead to the tax system being treated with more respect.

Izza said on Friday that those engaged in such schemes ‘need to look at themselves in the mirror and ask – am I upholding the honour and reputation of ICAEW Chartered Accountants and am I seen to be doing that?’

If the answer is no, he said, ‘they need to ask themselves whether they want to belong to our profession or not’.

Izza said taxpayers would ‘increasingly want to be reassured’ that their tax affairs are dealt with in a responsible and professional way. ‘ICAEW chartered accountants should be trusted to abide by our code of ethics and in the coming weeks we will be looking at what more can be done to reinforce that trust,’ he wrote.


Last week Graham Aaronson, the tax lawyer whose study group has recommended the introduction of a general anti-abuse rule, said abusive schemes were anti-social. ‘More riots in the streets’ would not be far away if aggressive tax avoidance was not tackled, he said.

Rebecca Benneyworth, Editor of Tax Adviser and Deputy Chairman of the ICAEW Tax Faculty, told Tax Journal that it was time that ‘someone held a mirror up for [those who use abusive schemes] to take a good long look at themselves’. The Times columnist David Aaronovitch had suggested that instead of asking their accountants if a tax avoidance scheme was legal, the rich ‘should ask themselves: is it moral?’


Mark Lee, Chairman of the Tax Advice Network, told Tax Journal on Friday that Patrick Stevens’s  statement marked a watershed in the tax avoidance debate.

‘In my view this is only a step away from requiring accountants and tax advisers to be as cautious when recommending tax schemes as when recommending investments,’ he said.

Responding today to Izza’s comments, Lee – a former Chairman of the ICAEW Tax Faculty – said he was ‘absolutely delighted to see this clear statement from ICAEW’.

He added: ‘I have been arguing for some years now that there is no obligation on members to promote aggressive tax avoidance schemes to clients. I have had to defend this view against those who argue, often in a less than objective way, that accountants are at risk of being sued for negligence if they fail to make clients aware of all “legal” ways available to reduce their tax bills.’


Guidance on professional conduct in relation to taxation, issued jointly by the professional bodies CIOT, ATT, ACCA, ICAEW, ICAS, IIT and STEP, requires members to ‘comply with relevant laws and regulations and avoid any action that discredits the profession’.

That guidance was updated 18 months ago. Tax Journal reported on 5 January 2011 that the guidance on tax avoidance was largely unchanged. While it pointed out that avoidance was legal, and that all taxpayers had ‘the right to arrange their affairs under the law to minimise their liability to tax’, it also advised members to consider carefully, and in the light of the client’s wider interests, the ‘risks and merits’ of arrangements that the tax authorities may view as artificial.

A new section advised members to ‘ensure that clients are fully aware of the risks of undertaking transactions that HMRC may regard as “unacceptable” and that such transactions may be subject to litigation or possible changes in law’. The government indicated in 2004 that such changes may be retrospective.