A number of legal experts called on investors to pool together and launch US-style class action law suits against their advisers, who they said, had failed to advise their clients of the risks of investing in such schemes.
HMRC started to clamp down aggressively on schemes it deemed to have been designed specifically to avoid tax in the last year.
New powers allowed it to demand upfront payment of disputed tax from investors, which cannot be appealed against, meaning investors targeted by the tax office were put under pressure to find large sums of money quickly.
Lawyers told the FT advisers should be held liable for financial redress because they were responsible for vetting the promoters of the schemes and certifying the schemes worked.
“While the promoters are often long gone, their accountants and IFAs will have professional indemnity insurance”, said Withers special counsel Tessa Lorimer.
A class action would be a much cheaper option than individual claims, given most investors in such schemes were “in the same position”, another lawyer pointed out.
However some were more sceptical, saying advisers’ negligence would be difficult to prove in court, based on the “health warnings” that are often included in the small prints of the contracts.
HMRC has a target of reclaiming tax from around 33,000 people by April 2016.
New rules coming into force on 27 March will force promoters of ‘high risk’ tax avoidance schemes to make public if they are being monitored by the tax office.
They will also face a fines of up to £1m if they fail to comply with the conditions of a monitoring notice.