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Osborne launches crackdown on ‘cowboy’ tax advisers

by Alex Steger on Dec 04, 2012 at 07:59

Osborne launches crackdown on ‘cowboy’ tax advisers

Chancellor George Osborne yesterday launched a crackdown on ‘cowboy ‘tax advisers who design and promote tax avoidance schemes.

Osborne (pictured) introduced legislation aimed at targeting those responsible for designing and promoting abusive schemes used to shelter wealth from the taxman, according to the Evening Standard.

Under laws planned for next year tax advisers responsible for the schemes will face fines if they fail to be open with HM Revenue & Customs (HMRC), and must increase the range of information they must pass on to the taxman team dealing with loopholes.

The Standard reported Osborne as saying: ‘The action we are announcing today will help HMRC close in not only on those who seek to avoid or evade tax, but on the dubious “cowboy” advisers who sell them the schemes and dodges they use to cheat the law-abiding majority.’

Osborne is expected to announce further measures to clamp-down on tax avoidance, through shutting down loopholes, in his Autumn Statement on Wednesday 5 December.

37 comments so far. Why not have your say?

Arthur Schopenhauer

Dec 04, 2012 at 08:17

Maybe he could be more even handed and go for Cowboys and indians

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JM Keynes

Dec 04, 2012 at 08:17

We really do need someone other than MPs to lecture the public on the "morality" of paying tax, where there is a legal way of avoiding it.

Likewise, watching Margaret Hodge MP and her colleagues calling in the CEOs of the likes of Starbucks (who employ thousands of people) to lecture them on "morality" is sickening.

MPs? How many of them were "whiter than white" when their expenses were scrutinised in the media?

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Dec 04, 2012 at 08:20

Someone needs to tell the chancellor of the exchequer that tax avoidance is perfectly legal and he needs to stop lumping it in with tax evasion. He clearly thinks that beating this "big nasty tax avoiders" drum is winning him votes with the populous.

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Dec 04, 2012 at 08:23

...........such as the ones who "advised" MPs to 'flip' their second homes???

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Dec 04, 2012 at 08:44

what's morally reprehensible is the way MPs/ civil servants waste tax payers money with their vote winning policies, look at people like ed balls lecturing the govt on how to run the economy when his lot ran up a trillion pound deficit.

Not only do they get away with it, but the idiots of the labour party will get relected to have a third bash since the 60s at bankrupting the country.

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Dec 04, 2012 at 09:01

I have read and listened to the articles ... didn't hear about cowboys and indians. And what was the legislation ????

Does the government seriously consider this to be the best way to win votes?????

George Osborne (aka The Artful Dodger himself) ... turkeys voting for christmas springs to mind.

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Paul Harding

Dec 04, 2012 at 09:20

Obviously they need to pursue relentlessly the "illegal" evaders, but its disturbing where this is going when "legal" avoidance is being given the same weight. I even heard the boss of Tui this morning on Radio 5 having to defend not paying CT this year simply because they had losses to offset.

Maybe "avoiding" tax on your annual Personal Allowance will be the next big bad thing.......

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Richard Hardy

Dec 04, 2012 at 09:43

The first thing George Osbourne can do is stop spouting hot air and put the political mandate to reduce red tape into action.

If he wants to raise the tax take he could start by getting rid of all the compliance quango's and business prevention departments run simply to keep people in jobs.

Just think of the tax that could be raised if the financial services industry didn't keep the FSA, FOS and FSCS at the size they are.

This would allow those who actually make money to get out from behind their desks and generate income rather than making sure their reports are correct and they haven't missed a paragraph or sentence that will leave them liable to be sued in 10 years time.

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David Cathcart

Dec 04, 2012 at 09:48

Are HMRC going to target the dubious “cowboy” adviser firm who advised his family on the offshore trust, which saves the Osbourne family millions of pounds in IHT. No I thought not !!

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Julian Stevens

Dec 04, 2012 at 09:51

If a tax avoidance scheme is based on legal allowances in the rules, then how can advisers who exploit those legal allowances be described as "cowboys"? If the government is unhappy with the availability of various allowances, then it is with the government that the onus lies to change the rules and close what it perceives to be loopholes. Avoidance of tax by the use of legal allowances is......legal. It isn't evasion. On the basis that nobody is under any obligation to pay any more tax than the rules dictate, morality doesn't come into it.

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Dec 04, 2012 at 09:55

Its legal. End of

We know businesses that are only in existence today, employing people, paying NI, paying VAT etc... BECAUSE they did some LEGAL tax planning

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philip spierling

Dec 04, 2012 at 10:00

i have just done an ISA for a client sheltering over £11,000 from taxes.

do i need to send futher details to HMRC about this tax sheltering scheme.

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Dec 04, 2012 at 10:07

Excellent points Julian

Maybe someone should get hold of Lord Clyde's 1929 shovel and use it to give old Georgie boy something to remind him about the boundaries between Parliament and the Judiciary.

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Man in Black

Dec 04, 2012 at 10:29

Clearly, if you want serious tax planning advice, you're going to have to approach a firm out of jurisdiction...

...though maybe people would be more willing to pay tax if the rates were brought down to acceptable levels.

But what we have seen in recent days is a slow realisation that whilst the middle classes struggle under the weight of an horrendous burden of tax, multi-national companies use perfectly legal loopholes to avoid huge amounts. It would be much better use of the Chancellors time to legislate to amend the taxation of multinational Groups instead of trying to pick on individual tax advisers and individual tax payers who frankly have just had enough of Bankrolling the over-profligate State.

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Paul Barnard

Dec 04, 2012 at 10:31

I heard someone on the radio, whom I thought summed it up well. He said that whilst it wouldn't be illegal for him to walk past a man lying on the pavement in flames, but it would be morally wrong so to do.

I prefer to keep nurses on wards and police on the beat, paid for by a rigourously monitored tax regime, rather than bleat about "oh, it's legal, nothing wrong then". As advisers we actually should care about ethics and morality too, shouldn't we?

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Derrick Coade

Dec 04, 2012 at 10:34

I just thought that you would all like to know that in 2002 when the Labour Party sold their headquarters they took advantage of a Tax Avoidence opportunity (Legal of course) to save it over £200,000 in Stamp Duty Land Tax. It seems that there may be one rule of them and one for the rest of us.

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Man in Black

Dec 04, 2012 at 10:49


I also would like to see Police on the beat and Nurses on hospital wards.

But like most rationale people, I have less interest paying for welfare claimants to live in parts of London I have to pay to commute to, Government Departments spending £20 per lightbulb, Diversity co-ordinators clogging up the NHS, more Civil Servants in the MoD than personnel in the RAF et cetera et cetera. And don't get me started on the perverse attempts to sub-contract to the so-called Private Sector (the 'shadow public sector') with its hugely wasteful consultancy contracts.

The current confiscatory levels of tax cannot be justified in terms of essential public services: Government spending is this high because Government is so wasteful.

As for morality, there's a clear qualitative difference between individuals trimming their tax bills to provide for their families and the blatant avoision practiced by many multi-nationals. For pity sake: at one point this Government was trying to wipe out private donations to charity in order to raise more tax. That's not morality - that's just theft.

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Dermot Brannigan

Dec 04, 2012 at 10:53

One of the problems atm is this discussion is being had by people who will also tell you they're 'disengaged' with politics, or even worse, don't vote!

BBC seem to be heading up the crusade too. If Starbucks increase their tax bill then they're likely to have to lay some people off and/or pay their suppliers less. Either way there is less tax being paid as a result. It's the same money we're talking about here, or are we all going to suddenly double our coffee expenditure?

Corporation tax is 20% for first £300k, but people would rather that's paid than have an organisation pay a bonus to their top earners, attracting 50% tax!

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the elephant in the room

Dec 04, 2012 at 10:54

Whilst I have no political affiliation (I am after all an Elephant!), but I feel compelled to correct Derrick on his comment. It was not a tax avoidance scheme used to sell Labour HQ, the property was owned by an SPV (a Ltd Co), and the company that owned the property was sold - a not particularly unusual transaction in the commercial property market. Certainly not a 'tax avoidance scheme', unless selling UK shares is considered tax avoidance. Also Derrick, you have clearly succumbed to journalistic spin, as it is the purchaser not the seller that pays any Stamp Duty, whether it is be based on shares or property. But I know you know that really….

This is all of course, I minor diversion, as the worst thing for tax revenue is surely unemployment. What is our work experience chancellor going to do about that?

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David Curley Dip extrodinaire

Dec 04, 2012 at 11:19

Is it true that there a many higher positioned Civil servants who exploit the tax system by having their pay channeled through Ltd companies, it was a TAx adviser who told me about this and I can believe it, its how many in the BBC are paid

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Dec 04, 2012 at 11:34

What a load of self centred, morally bankrupt, idiots we have on this thread today!

There is a big difference between the perfectly legitimate methods of reducing IHT or savings tax via utilising gifting rules, BPR or ISA methods. Even investing in equities reduces income tax and exposes profit to the big allowances of CGT. These are all schemes that are based on government leglislation, do not need offshore or international washing and are well within the realms of legal schemes and have been tried and tested by HMRC.

What our politically astute chancellor is doing is to say to those who flog untested tax avoidance schemes that involve washing money through a number of stages with no other reason but to avoid taxation is: You are out of business.

These scheme floggers include many international accountancy practices with no loyalty to the country they are attempting to swindle, as well as many corporate lawyers who look into the minutae of regulations to come up with another wheese in order to line their own pockets.

For those of you out there who say 'I disagree, all these schemes are within the letter of the law', and 'It is the duty of all citizens to pay as little tax as legal' miss the point and have no moral context.

Lets hope the first person who gets caught by this proposed leglislation gets fined an amount equivilent to the cost of HMRCs investigation, the cost of changing the tax law and a fine. Bankruptcy would also appeal to me for those promoting these schemes, Jail time too for taking money for an untested, therefore fraudulent scheme.

Starbucks, Google and Amazon have been publically named and shamed for employing barely legitimate overseas transactions in order to transfer British tax liability to overseas duristrictions for sales made in the UK. This looks like it will work.

You may not like the level of tax charged in the UK, you may not agree with how your tax money is spent, you may not even agree with the morals and ambition of our politicians, but the alternative is anarchy!

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Phil Castle

Dec 04, 2012 at 11:52

Correct me if I am wrong, but the reason Starbucks didn't pay any tax in the Uk was because they had a licensing agreement to pay money to their Dutch parent. As such any profit on that agreement would have been payable in Holland instead. So the issue may be that most tax was paid in Holland rather than the UK? I don't know if that was the case or not. Does anyone know? If so, the Dutch govt might be a bit annoyed if their tax take drops as a result of this.

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JM Keynes

Dec 04, 2012 at 11:54


au contraire, my tub thumping friend, the alternative is pragmatism. Starbucks are big employers in the UK, so a lot of revenue is derived from this by way of NI and income tax.

I revert back to my original observation - naming and shaming by MPs is a bit rich, given the fact that most of them have had their snouts in the trough for a number of years.

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Adam grant via mobile

Dec 04, 2012 at 11:58

Are the IFA's who advise on these agressive tax avoidance schemes (that it would appear to be causing so much concern, that they are likley to be banned) the same IFA's that should be the only advisers that solicitors should be able to refer to?

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Dec 04, 2012 at 12:01

Hmmm, I think I'm the odd one out here then.

Personally I would very much like to see these guys hauled across the coals. Not just these guys but the cab drivers, the plumbers, the politicians, the whole bloomin lot.

If everybody in this country just paid what they owe then we'd have more money than we'd know what to do with, although I'm sure the MoD, DWP and NHS could waste it between them.

The people drawing comparisons between personal allowances and these schemes. Really? Book publishing, lending money to yourself as a soletrader/Ltd, film rights etc etc. You 're honestly trying to say that's the same as somebody using their personal allowance?

I would like very much to know why, if these schemes are so cut and dry legal, that so much of the "management costs" are retained to hire a QC to fight the case in court which typically ends up in a 50/50 compromise between HMRC and the scheme. End result? Dodgy firm gets paid in full. Barrister gets paid in full. Actual savings made by client pretty much equal out after stress, hassle, costs etc. HMRC and therefore, we, the British public lose out as HMRC uses more of our money to fight these cases. If they're so clearly legal, why do the courts not seem to agree?

I would like to see cab drivers and tradesmen hauled over the coals too for not declaring cash in hand work, but that's a hell of a lot harder to prove so let's start at the top and work down.

Half the problem with this country is the mentality that says "we pay too much tax and everybody's at it so if I can find a gap I'll take it." If people had any confidence that everybody paid tax and were paying their bit then I think there would be far less resentment in paying said tax. If we didn't live in a welfare state where we watched our taxes thrown away on so many undeserving causes then I for one would feel far less resentful.

In short, while I would much rather see a better USE of the taxes, that in itself is not (in my opinion) good enough justification to clearly avoid paying what is owed from a moral point of view. You can't withhold rent because the landlord hasn't fixed the shower, you can't withhold tax because you don't like how it's being spent.... even though it desperately makes me want to.

Rant over.

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Dec 04, 2012 at 12:03

^^^ what Hicky said.

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Phil Castle

Dec 04, 2012 at 12:04

@ Hicky - I agree with you, there is a big difference between legitimate tax planning using government designed initiatives such as BPR, ISAs, Pensions etc, and some of these jolly weases arranged , often by senior people in government and business for their own purposes.

Personally I think there would be a lot to be said for an individual and business having to declare what tax they have actually paid in tax each year publicly.

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Dec 04, 2012 at 12:11

@Phil C, I read they pay 5% to Starbucks Holland to license the name and had done a deal with the Dutch tax authorities to keep the tax rate lower than the usual rate of Dutch corporation tax. They then pay a 20% mark up on the coffee bought from Starbucks Switzerland. All very legal I assume, all very shifty though.

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Dec 04, 2012 at 12:13

@ Phil

That's an excellent idea.

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Julian Stevens

Dec 04, 2012 at 12:29

To Smithling ~ your sentiments may be all very noble and upstanding but if MP's and numerous other people working (at our expense) in the public sector weren't on the fiddle and worse, left, right and centre then we might be a bit more inclined to be upstanding citizens and pay what the system says we should.

Then again, if the system itself wasn't so unnecessarily complicated (just consider NIC) and full of more holes than a colander (all of which is mainly for the purpose of public sector job creation anyway), it wouldn't be anything like as easy for people with clever accountants to dodge tax in the first place.

And who devised all these loopholes and allowances to begin with? The very people now bitching about people out here taking advantage of them.

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Dec 04, 2012 at 13:03

@ Julian

Blimey, you have a warped view of the world mate. The system is so complicated because of all the loophole closing over the last 50 years in order to stop the tax cheats. Layer on top of this various exemptions designed to help certian sectors, like BPR and VCTs, all written by fairly inept civil servants, and you will always have a recepie for disaster darling.

So if we had a system of level taxation, all at one flat rate, all paid by all with no allowances and exemptions, would clever accountants be able to get around it? Would the public deem it fair? Could a party who introduced this system ever get re-ellected?

What we really need is a law making it a criminal offence to place the greedy in jail.

Mind you, the jail would have to be the size of Scotland.


Perhaps we could stimulate the English economy by re-engineering Hadrians Wall!

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Dec 04, 2012 at 13:31


I honestly don't think it is that "noble and upstanding", I just see it as what the rule book says.

Equally, as I made quite clear in my first post, I think using the politicians actions as justification makes somebody incredibly poor in character. So because they do it it's okay for everybody else to do it?

No they don't set a good example, no they shouldn't get away with it, but that does not give you or I moral justification to sit back like petulant children and say "well he started it".

I think your second paragraph is rather broad and have no real response to it other than this. Just because it is complicated does not make it okay to exploit those caveats in the system. It's not complicated to some people clearly. At the risk of sounding a bit like a comic book catchphrase, with great power/understanding comes great responsibility. That is after all what the entire reputation of the Advice industry is built on is it not?

I have been courted by a number of these people and I'm always left with the same feeling, which is one of distrust, dislike and general disregard. If a client wants to find out about one of these people then I'll leave them to their own devices. As if enough lessons haven't been learned in recent years about the powers of retrospective punishment.

As for your last comment. Well we seem to differ. I believe loopholes are, in the main, created by accident, as a negative result.

You obviously believe loopholes are created deliberately by the evil overlords in government for their own purposes, to exploit and flout the very system they created and that it is only sensible and fair that we should all try and exploit these loopholes en masse. Except you don't seem to have made allowance for the idea that if we ALL did it and paid 5% tax then the country would be bankrupt and we'd descend into chaos.

So therefore I can only assume that by simple deduction you must be relying on the fact that not everybody has access to these facilities and not everybody feels like you.

In short, with your way of thinking, you are hoping others pick up your bill... which unless I've missed something is exactly the quality which you seem to so freely despise in government and elsewhere is it not??

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Ian Wells

Dec 04, 2012 at 14:12

IRC V Duke of Westminster

“Every man is entitled if he can to order his affairs

so that the tax attaching under the appropriate Acts is less

than it would be otherwise.”

That's the law. How should we best deal with this liberty. Simplification could remove loopholes and make planning less beneficial. How many families don't bother with trusts now that the nil rate band is tranferrable. It's only an example, but this cost next to nothing to implement, and I'm sure there are more. No more "employing" wives or husbands in contrived roles to use up the personal allowance, simply transfer it instead. Stop mucking around with pension tax relief and the like and start focussing on criminal VAT and dodgy offshore umbrella scheme. I'm a huge fan of the Ramsey principle. If it looks dodgy, ignore the steps and collect the tax that would otherwise be due.

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Dec 04, 2012 at 14:32

I think we should all agree that all the wealth and jobs we create all belong to the government. We should be jolly cheerful they allow us to keep any of the fruits of our endeavors.

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Julian Stevens

Dec 05, 2012 at 09:49

It may be worth bearing in mind that when Hong Kong, some years back, simplified its tax system and lowered the rates levied against its citizens' earnings, the government's gross tax take actually increased. This, I imagine, was because people were less bothered about spending money on finding ways of paying less than the rules stated they should and it was also easier for the authorities to challenge schemes designed for that purpose.

I'm not saying that just because MP's are all too often on the fiddle that makes it okay for the rest of us to do likewise (I've never fiddled my tax or encouraged anyone else to do so), but such activities hardly set a good example likely to encourage good behaviour on the part of everyone else.

If HMRC doesn't like various tax reduction schemes then, if such schemes contravene the relevant rules, it has the power to challenge them, if necessary in a court of law. If it wins, a precedent will have been established against the use of any similar schemes in the future. When it comes to paying tax, I still maintain that morality doesn't come into it. If the rules say that the taxes due against various elements of your income are £A, £B and £C but that against those liabilities you can offset allowances £X, £Y and £Z, then why wouldn't you? Okay, some allowances are more obscure and more open to argument as to the validity of their application, but if they're in the rules then who are we to criticise clever accountants for giving them a go? I sure as hell have no intention of waiving my personal allowance just because the government says it needs more tax revenues.

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The Rumpo Kid

Dec 05, 2012 at 15:25

Let me tell ya pardner, if Little Georgie comes a gunnin' for me then I'll be shootin' first and askin' questions later.

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Julian Stevens

Dec 06, 2012 at 17:50

The Tax System, explained in beer.

Suppose that every day, ten men go out for beer and the bill for all ten comes to £100.

If they paid their bill the way we pay our taxes, it would go something like this...

The first four men (the poorest) would pay nothing.

The fifth would pay £1.

The sixth would pay £3.

The seventh would pay £7.

The eighth would pay £12.

The ninth would pay £18.

The tenth man (the wealthiest) would pay £59.

So that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20. Drinks for the ten will now cost just £80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected.

They would still drink for free. But what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share?

They realised that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so the fifth man, like the first four, now paid nothing (100% savings)

The sixth now paid £2 instead of £3 (33% savings).

The seventh now pay £5 instead of £7 (28% savings).

The eighth now paid £9 instead of £12 (25% savings).

The ninth now paid £14 instead of £18 (22% savings).

The tenth now paid £49 instead of £59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free.

But once outside the bar, the men began to compare their savings.

"I only got a pound out of the £20" declared the sixth man. He pointed to the tenth man "but he got £10!"

"Yeah, that's right" exclaimed the fifth man. "I only saved a pound too. It's unfair that he got ten times more than me!"

"That's true!!" shouted the seventh man. "Why should he get £10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute" yelled the first four men in unison, "We didn't get anything at all. The system exploits the poor!"

The nine men rounded on the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him.

But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half the bill!

And that, boys and girls, journalists and college professors, is how our tax system works.

The people who pay the highest taxes get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore.

In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.

Professor of Economics

For those who understand, no explanation is needed.

For those who do not understand, no explanation is possible.

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