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Advisers warned on HMRC avoidance policy

Accountants are at risk of being hit with compensation claims from clients, if they recommend a scheme that HM Revenue & Customs later claims is not effective. The warning, from City law firm Reynolds Porter Chamberlain LLP, follows moves by HMRC to identify and publish tax avoidance schemes in a document called Spotlights. HMRC will caution customers that it would challenge these schemes and seek maximum possible payment of any underpaid tax, interest and penalties. But the Reynolds Porter Chamberlain warns that HMRC's opinions on the schemes may not necessarily be correct. This could have unfortunate consequences of wrongly encouraging users of the schemes to demand compensation from their professional advisers. Ian Gordon, from RPC's professional risks group, said: 'Clients often make the incorrect assumption that, if HMRC challenges a tax planning scheme, then it must be ineffective and the professional adviser must have been negligent. However HMRC's view on the effectiveness of the scheme may be incorrect.' Mark Whitehouse, of RPC's tax litigation group, said: 'HMRC's Litigation and Settlement Strategy has led to a more entrenched approach with HMRC far less likely to want to do deals where tax planning is involved. Indeed they are more likely to seek to recover the full amount of tax which they consider to have been avoided with interest and penalties'
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