A tax expert at national law firm Shoosmiths has warned people in the public eye to handle their tax affairs responsibly - or face repercussions on their reputation, brand and future wealth.
Niall Murphy, corporate partner at Shoosmiths, issues the warning as the news reports that several high net worth celebrities, entrepreneurs and corporates potentially face massive bills - running into tens if not hundreds of thousands of pounds - for their participation in tax avoidance schemes, such as the Ingenious Film Partners 2 LLP scheme.
Niall said: 'The last couple of days has shown that even though a tax avoidance scheme may present itself as lawful, tax avoidance as a whole is still frowned upon by the public and media. Being involved in a tax avoidance scheme has the capacity to potentially damage someone's career - impacting negatively upon their reputation and hence, their future earnings'.
He continued, 'I would advise any celebrity or person whose career relies heavily on their public reputation to be vigilant about entering in to such schemes. HMRC has also proposed to tackle tax avoidance by, in certain circumstances, issuing an 'accelerated payment' notice to taxpayers. These notices are intended to demand advance payment if the matter has not been settled at the time, and works on a 'pay now, dispute later' arrangement.
'This new measure is bound to ruffle a few feathers, so significant legal challenge is expected. More judges have even been appointed to sit on first tier and upper tier tax tribunals. People who are thinking of becoming involved in these schemes now need to weigh up the risks involved.'
HMRC can issue a notice to counteract a tax advantage where the matter is the subject of an ongoing appeal and falls within either the Disclosure of Tax Avoidance Scheme regime, or is sufficiently similar to a matter which has been decided by a court, or by using the General Anti-Abuse Rule (GAAR). However, the GAAR only applies to arrangements that have been entered into, on, or after 17 July 2013.
The measures, which were set out in this year's Finance Bill, have been approved and will come in to law this month.