Revenue targets accountancy firms over gift aid schemes

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The Independent Online

Vantis, an accountancy and tax firm listed on the Alternative Investment Market, has become embroiled in a government crackdown on alleged abuses of gift aid schemes for tax relief.

It is understood to be among a number of accountancy firms that have been visited by Revenue & Customs in connection with the schemes, which allow individuals to claim tax breaks on shares gifted to charities.

A spokesman for Vantis confirmed the firm had received a visit from the Revenue in connection with four clients, but said that matters relating to those clients would stay confidential.

Although the Revenue has not confirmed the visits or the powers under which they took place, it is understood that the campaign forms part of the Government's wider investigations into what it calls abusive tax- avoidance schemes.

A typical scheme would involve an initial share investment in a shell company that would then be floated, usually on the AIM or Ofex exchanges, ensuring the shares were valued at a higher price. These would then be gifted to a charity, leaving the individual able to claim relief of up to 40 per cent on the market value of the shares.

For instance, an individual would make an initial investment of £5,000 in a company, which could then be floated and subsequently valued at £50,000; the shares would then be gifted to a charity, allowing the individual to claim tax relief of up to £20,000.

However, it is understood that the four customers of Vantis, which are among 18,000 clients on the firm's books, did not involve shell companies.

There is no loophole that can be closed as the Government is actively encouraging individuals to make such charitable contributions. Nor is the scheme illegal.

But the potential abuses have angered the charity sector. A spokeswoman for the Charity Commission said: "If shares are being inflated to give tax reliefs in excess of the true value of the gift, then it is clearly contrary to the letter and intent of the scheme."

According to one legal expert, the scheme would be abusive if the valuation of a company had been artificially inflated.

Aileen Barry, a tax investigation specialist at law firm DLA Piper said: "There is often complicity between those buying the shares and the person who had gifted them, so that the buyer was not out of pocket."

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