{"id":11790,"date":"2023-10-02T14:14:32","date_gmt":"2023-10-02T13:14:32","guid":{"rendered":"https:\/\/www.taxpolicy.org.uk\/?p=11790"},"modified":"2024-01-04T08:33:19","modified_gmt":"2024-01-04T08:33:19","slug":"kc_insurance","status":"publish","type":"post","link":"https:\/\/heacham.neidles.com\/2023\/10\/02\/kc_insurance\/","title":{"rendered":"Tax avoidance scheme myths: “we have a KC opinion” and “we’re fully insured”"},"content":{"rendered":"\n

There are a surprising number of people still promoting tax avoidance schemes. Of course, they say they’re not tax avoidance schemes, but the <\/b>giveaway is that they are promising a much better tax result than you’d normally get. Often this makes people nervous. Two lines the promoters use to get round this are “we have an opinion from an independent KC” and “don’t worry, we’re fully insured”.<\/em><\/strong><\/p>\n\n\n\n

Here’s why this should make you more, not less, worried. <\/em><\/strong><\/p>\n\n\n

The problem with KC opinions<\/h2>\n\n\n

A KC avoidance scheme opinion in practice provides you, the client, with zero comfort. In fact it potentially makes your position worse.<\/p>\n\n\n\n

1. The opinion is probably wrong<\/strong><\/p>\n\n\n\n

Most KCs are outstanding lawyers with an excellent reputation – they will give the correct legal answer, whether it’s convenient or not. But there are some who, even when faced with dubious tax avoidance schemes, give the answer the client wants. Jolyon Maugham described them as “T<\/a>he Boys Who Won’t Say ‘No’<\/a>“. <\/p>\n\n\n\n

And The Boys usually turn out to be wrong. <\/p>\n\n\n\n

The taxpayer has lost almost every single tax avoidance case to come before the courts in the last 25 years. I’m aware of only two cases1<\/a><\/sup>the SHIPS 2<\/a> case, essentially because the legislation in question was such a mess that the Court of Appeal didn’t feel able to apply a purposive construction, and D’Arcy<\/a><\/em>, where two anti-avoidance rules accidentally created a loophole.<\/span> where the taxpayer won, and the response was to enact the general anti-abuse rule (GAAR) so that it wouldn’t happen again.<\/p>\n\n\n\n

The Boys provided opinions for many of these, and all of them were wrong. <\/p>\n\n\n\n

Mostly we don’t get to see the opinions, or even know which KC issued them, but in some cases we have the details:<\/p>\n\n\n\n