Social media tax advisers should be avoided

Social media use has increased phenomenally - so fast that regulation is playing catch-up to prevent consumers from being exploited.

This extends to convincing and smartly dressed individuals selling potentially dubious tax avoidance schemes to unsuspecting and financially naive individuals.

HMRC has spent decades battling artificial tax avoidance schemes. Legislation has frequently been enacted to close the loopholes exploited by unscrupulous advisers, who exploit their clients and extract extortionate fees in the process. The war on avoidance is not yet won, but significant progress has been made.

The ‘tax gap’, which represents the difference between what should theoretically be paid in tax and what HMRC actually collects, is currently estimated to be £35.8bn in total. 

The tax gap relating to avoidance of income tax, National Insurance contributions and capital gains tax has fallen over time to £0.5bn, less than 1.5% of the total tax gap.

Beverston Accountants are regulated and bound by a code of conduct – so we do not engage in providing artificial tax avoidance schemes.

However, providing tax advice is not formally regulated, and anyone can present themselves as a tax adviser. Those promoting what appear to be complex tax avoidance schemes on TikTok or elsewhere will often highlight that their advice is backed by a barrister’s opinion. A long-standing tactic designed to provide comfort. However, heavily promoted tax planning, which emphasises the support of a barrister’s opinion, can represent a red flag.

Anyone who buys ‘advice’ from these individuals or firms is at risk of incurring heavy penalties or, in extreme circumstances, criminal proceedings.

Meanwhile, the individual or firm promoting the scheme, together with its ‘advisers’, will often be long gone. Be very wary of anything that seems too good to be true. Be especially wary of anything of a complex financial nature sold via social media, cold-callers and email spam.

We have seen this sort of thing many times, and, unfortunately, some clients get scammed because they take the bait before speaking to us.

Our advice to clients is that they discuss their circumstances with us and have an open dialogue so we can really understand their affairs. That way, we are in the best position to spot tax-saving opportunities that will not land them in hot water.