Advisers at risk from tax avoidance trap

Yesterday the IRD released its draft tax avoidance interpretation statement, which is largely based upon the Supreme Court's judgments and approach to the law in the Ben Nevis and Penny and Hooper cases.

PricewaterhouseCoopers tax partner Geof Nightingale said the message is clear - transactions or financial products that have any sort of tax benefit could be at risk, even if they comply with the letter of the law.

"The way it works is you may have structured a transaction so it meets all the tax laws but if Inland Revenue doesn't like the outcome from a tax perspective it can change it backwards.

"If you're advising on a transaction you've got to ask whether Parliament would have liked that outcome."