Tax solicitors safer choice than accountants

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Recent Supreme Court decisions show your risks when obtaining tax advice from accountants or tax advisors. Specialist tax solicitors may offer better advice

It’s clear that there is a strong appetite from the public for a more aggressive approach to be adopted by HMRC to tax planning and/or blatant tax evasion. Regardless of the rights or wrongs of a business acting in a lawful way but which means minimising tax, all businesses and individuals that engage in strategic tax planning and/or who already have an issue with a possible tax investigation should be alert in this environment.

It is also worth noting that the HMRC is having it’s investigative resources boosted in terms of manpower and expertise at the moment, giving another clear signal of intent.

When thinking of tax planning or responding to a tax investigation, it is common and understandable to think of going to see a retained accountant or specialist tax accountant or advisor instead of a tax solicitor. However, there is a highly significant advantage to instructing a solicitor rather than accountant.

Legal professional Privilege

Legal privilege covers communications between solicitors and clients but it does not apply for accountants or other advisors. In short, this means that documents and communications which are in the possession of your accountant or tax advisor who is not a solicitor will be capable of being demanded by HMRC and used against you. This is highly significant for obvious reasons.

Aside from the issue of legal professional privilege where the principle that it doesn’t apply to accountants has been reaffirmed this week in Supreme Court ruling, in practical terms, another good reason for retaining solicitors, especially after a tax scheme is in place, is that if there is an investigation, accountants or tax advisors may have a conflict of interest in advising you in the event of a challenge or investigation.

Thirdly and finally, all solicitors are required to have a compulsory minimum level of professional indemnity cover of at least £1 million which may not apply to other tax advisors.