There has been a more drastic occurrence of investor detriment. In the ‘loan charge’ debacle, where HMRC treated certain tax avoidance schemes as ‘disguised remuneration’, investors were penalised while there were no repercussions for the firms promoting such schemes as tax compliant.
It is saddening and sobering that this was linked to a number of investor suicides.
The horse has bolted, but a cross-party parliamentary working group was set up to examine the loan charge issue.
Excuse my frankness, but it is plainly imbalanced to just chase after taxpayers who are not au fait with all the nuances that sit behind CGT and then breach their obligations. Especially when investment providers are generally left alone or given a light tap on the wrist should HMRC learn that they have not provided investors with enough information about gains that eventually lead to misreporting troubles.
In theory, the onset of consumer duty ought to improve matters; by not supplying investors with sufficient details about the products they are taking, including the impact on their tax liability, financial organisations are presumably failing to avoid causing foreseeable harm to their target market.
These providers should certainly be encouraged to shape up here, as soon as they can. However, in practice, it will be up to the Financial Conduct Authority to prod and police the providers to be fully transparent in their information sharing under the duty.
Which brings us back to advisers, and it’s a case of thank heavens for those advice firms able to help their clients navigate this awkward terrain, doing their bit to ensure clients disclose correctly.
This assumes of course that the firm has the right tools to place to take care of this. And thereby lies a problem. If the firm is not properly equipped by their platform provider or adviser tool supplier to pinpoint a client’s CGT liabilities efficiently and accurately, the client remains at a potentially costly disadvantage should HMRC identify and penalise any discrepancies.
When the advised client signing off their self-assessment return can be the least knowledgeable party in the investment mix, they surely deserve all the assistance possible from their adviser to avoid being unnecessarily harmed, or worse, by the arcane workings of CGT.
Michael Edwards is managing director at FSL
