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A group of 100 private wealth advisers have urged their industry to set up a unit to inform the UK’s HM Revenue & Customs of ways in which tax law is being exploited.
The anonymous group of industry practitioners, who work across the sector from private banks to Big Four accountancy firms and elite law firms, are part of a newly formed group called the Progressive Advisors’ Movement.
The group is challenging what it describes as an “anti-tax” culture within the private wealth industry in which paying tax “is uniformly framed with a negative bias”.
In a report released on Wednesday the advisers criticised the industry as “politically biased” and “failing clients”.
“The sector is seen as playing a role in lobbying government in pursuit of lower taxes for wealthy clients,” the group said. “It is also seen as failing to fulfil any potential role in supporting government to identify where tax loopholes exist, or where regulations are being used beyond their intended purpose.”
Among other measures, the report recommended a new industry body to advise the UK government on where the wealthy were pushing tax law beyond its intended purpose.
“It is anti-democratic to have what is effectively a two-tier tax system, which means that if you have enough money to pay advisers you can take advantage of various loopholes and strategies that minimise tax,” said Stephanie Brobbey, a former private wealth lawyer who has spearheaded the campaign.
Brobbey worked for a decade at law firm Goodman Derrick, now RWK Goodman, before launching the Good Ancestor Movement, a consultancy helping wealthy clients achieve goals of responsible wealth stewardship and “radical redistribution”.
Her growing concern about pandemic-related inequality and the impact of increased taxes on those with lower incomes meant she felt her position as a professional services adviser within the private wealth industry “had become untenable”, she explained.
The report did not list specific tax loopholes and insisted the proposed industry body would not be a whistleblowing forum but a collaborative initiative between government and industry.
Asked about tax products that went beyond the law’s intended use, she gave the example of Aim portfolio stocks. If certain conditions are met, these allow investors to pass down assets free of inheritance tax after two years.
This was not the original purpose of this tax law, she said. “Depending on how much you are prepared to risk, it can enable quite a lot of wealth to be passed [down without tax].”
The advisers also accused the industry of not doing enough to understand different clients’ attitudes to tax and as a result auto-enrolling them into tax minimisation strategies. They argued there was a blind spot about clients who are “are tax-proud and do not want to minimise taxes”, though the report did not estimate the proportion of clients falling into this bracket.
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