THE recent furore over tax avoidance schemes used by various celebrities illustrates that using financial products because ‘everybody is doing it’ is seldom a good idea.

Without commenting on the rightness or wrongness of the tax arrangements revealed, it is clear that it did not turn out well for the investors. I have some sympathy for them: I suspect that many were poorly advised by salesmen who ignored the huge reputational risks. The furore reached its peak shortly after Government published its proposed general anti-abuse rule (GAAR) – intended to enable HM Revenue & Customs to counteract legal tax schemes that work but are seen as ‘abusive’. From April 2013, GAAR will give HMRC the power to recalculate the tax bills of individuals who tried to avoid tax in ways that cannot be regarded as ‘reasonable’.

While it may prove to be a workable backstop against the most aggressive schemes, it will still require HMRC to prove that deliberate tax abuse has occurred. However, the general anti- tax avoidance principle could give HMRC the power to nullify the tax effect of schemes immediately. The taxpayer would then have to prove that the arrangements were not for tax avoidance purposes: a “guilty until proven innocent” approach, which would overturn centuries of UK legal tradition. Such radical powers might have caused controversy in other times. So you don’t have to be a conspiracy theorist to see how helpful the Jimmy Carr story was for a Government insisting that everyone pays their fair share of tax. The publicity made its case for a GAAR.

Leaving aside the somewhat vexed topic of politicians, press and morals, it is important to remember that none of the proposed laws will make all tax avoidance illegal. So, for example, barring major changes in the law, individuals can still claim tax relief of up to �300,000 per year from investing �1m in the shares of companies qualifying under the enterprise investment scheme (and the shares can be sold tax free after three years).

But what if you were caught up in a ‘clever’ tax avoidance scheme and now regret it - what can you do? It may not be necessary, cost-effective or even possible, to simply quit the scheme overnight. Seeking independent, expert advice is essential to ensure you resolve the issue efficiently and don’t make things worse. At PKF we have always sought to protect our clients from the risks of aggressive tax schemes. We are experts in helping clients to use government-approved tax incentives without getting them a bad press. But, if you are in trouble with the tax man, we can also help you put things right in a cost-effective way.