A boutique tax advisory firm run by the Scottish National party’s new auditors has been accused of potentially running a tax avoidance scheme to help parents who are paying private school fees.
Signature Tax, an offshoot of AMS Accountants Group, offers clients “tailored tax solutions” on its website, including advice on paying fees in a “tax efficient manner”.
The SNP appointed AMS as its auditor more than six months after the previous firm quit, as it tried to reassure members it could avert a significant loss of public funding by filing its financial accounts on time.
Signature Tax’s website says its planning “allows grandparents to assist their children in a tax efficient manner” by helping them “fully utilise” the tax-free £12,570 personal allowance and £1,000 dividend allowance for each grandchild.
But the tax policy expert Dan Neidle said the complex arrangements could enable business owners who can grant shares to family members the ability to avoid almost £60,000 of tax on £100,000 of annual school fees.
Neidle, who investigated the Tory former cabinet minister Nadhim Zahawi’s tax affairs, told the Guardian it struck him as a “tax avoidance scheme”.
He said: “I expect HMRC will challenge it, and for their challenge to succeed. Any taxpayer who buys the scheme from them could end up in a very expensive mess, given HMRC’s new powers to penalise.”
The SNP leader, Humza Yousaf, confirmed on Wednesday that the party had signed a contract with AMS, based in Manchester, to work on both the party and the Westminster group’s accounts.
The appointment is a boost for Yousaf, whose first weeks as SNP leader have been overshadowed by concerns around internal governance and a police investigation into the party’s finances that began after his predecessor, Nicola Sturgeon, stepped down in March.
The party’s ability to file its accounts on time had been thrown into doubt by its revelation in April that the previous auditors, Johnston Carmichael, had quit last September.
AMS faces a tight deadline to submit audited accounts for the SNP’s Westminster group by 31 May or risk losing £1.2m of public funding, known as Short money, which is paid to opposition parties to assist their parliamentary work.
The SNP’s auditing issues have raised further questions about the party’s governance and transparency.
Stuart McDonald replaced Colin Beattie as the party’s treasurer less than a fortnight ago after Beattie stepped back from the role following his arrest as a suspect in the ongoing police investigation into the SNP’s funding and finances.
Operation Branchform, which was set up in July 2021 to investigate allegations the party had mishandled more than £600,000 in donations, has also included the arrest of the former chief executive Peter Murrell, who is Sturgeon’s husband. Both men were released without charge pending further inquiries.
The SNP declined to comment.
A Signature Group spokesperson said: “Signature Group is an award-winning mid-market advisory firm. The tax division (Signature Tax) has been recognised as providing excellent service in the sector and boasts an exceptional team of chartered tax advisers, lawyers and chartered accountants.
“Signature Tax has a strict tax compliance and risk policy which refrains from any form of aggressive tax planning that could be deemed ‘disclosable’ to HMRC or construed as a ‘tax avoidance scheme’. The tax division has been trading successfully for over a decade and has built a fantastic reputation in the market.
“We continue to build on our reputation and presence in the mid-market and continue to deliver exceptional growth year-on-year. Our most recent acquisitions include one of the largest teams of HMRC Dispute and Investigations specialists in the UK, which continually helps us to build on our existing fantastic relationship with HMRC.”
Industry experts have told the Guardian it is increasingly difficult for smaller organisations to find affordable auditors because of a lack of capacity in the sector, smaller clients being considered less profitable, and tightened regulation after a series of auditing and cross-selling scandals in recent years.
This has resulted in auditing firms putting more effort into larger clients. A more challenging regulatory environment also means auditing firms are much more risk-averse.
