The Advertising Standards Authority (ASA) has criticised Knight Wolffe, a wealth advisor for misleading income trust advertising. The advertising material even used HMRC’s logo.
The criticism was contained in a recently reported Spotlight 40 entitled “Income trust schemes: misleading advertising”. In the report HMRC criticise the Knight Wolffe income trust calling it a tax avoidance scheme. This is because the trust works by diverting income from a business into a trust. The trust would then lend the money back to the business owners and their families. Knight Wolffe claims that this means that no income tax or NIC will need to be paid.
HMRC also said that Knight Wolffe should not use their logo or claim that the trust had been “known and accepted by HMRC since 1994”. Knight Wolffe also claimed that the House of Lords approved the trust. Both claims were misleading and implied that both bodies had endorsed the trust.
In addition, the adverts did not mention the disguised remuneration scheme or the proposed loan charge. Knight Wolffe did not warn users that they might incur costs if HMRC challenged the arrangement. This could include costs arising from the General Anti Abuse Rule (GAAR).
Knight Wolffe claimed that the scheme did not involve tax avoidance, although the entire scheme seemed to be set up for the purposes of tax avoidance. Claims were made that the planning was effective by saying that it used statutory reliefs which was misleading because it implied that payments could be viewed as deductions for tax purposes which would mean that all income was tax-free.