Keith009

http://www.theaustralian.news.com.au...-23349,00.html

Looks like some Vermins have been very naughty!

dannyr

E&Y are a very large company, one of the biggest. They have a lot of clients.

I find it hard to believe that they would have only recommended this manoeuvre to one company. From the information in the article, it doesn't seem like a technique that would only be relevant to airlines, however Vermin are the only ones being named. I'd suggest that there's probably a few hundred other companies also being hit by this. I'm far from a Vermin fan, but I'd say this is more E&Y's fault than Virgins. They've taken on advice from their professionals (Accountants, if nobody else, are the experts in Taxation Law) which has turned out to be wrong.

d00t

.....and I get my 5% for alerting the ATO. Everyone's happy!

og

I bet we won't again be seeing the TV image of Vermin's BG infront of a red plane sprooking about getting the numbers right and suggesting (inferring) that the sun always shines from the back side of accountants.

sxc

Although I agree with you that E&Y would have recommended this to Virgin, it is always up to the client to decide whether to go ahead. Some company's have internal policies as to how aggressive they want to be with tax schemes depending on their corporate morals.

willyroo

Ahem the ads were for Chartered Accountants...


willyroo CPA

abcedaria

Corporate morals yes, however it was more the fact that this broke the law that was the problem. To what point is it up to the client, who has hired an expert to advise, to double check the legalities and correct nature of the advice supplied by that expert. Somehow I expect that while ILFC may get the fine, it's going to be EY paying the bill.

Globaliser

But whizz-bang super-complex tax avoidance schemes, when designed, are rarely just "legal" or "not legal". You simply don't know - law (at this level) is not like that. You take advice, you assess the risk of the ATO or the court taking one view or the other about whether it's legal or not legal, and then you decide whether or not you're going to give it a go. Part of your consideration is what you're going to get stuck with if the decision is that it's not legal.

And E&Y's advice is also unlikely to have been as simple as "it's legal". It will probably have been expressed in terms of probabilities and chances. If they have taken a proper view about the chances of it being found legal or not legal, and the client has then taken a decision to adopt the scheme and its risks, then the client should be paying if the risk materialises against him.

perthite

Given the following extract from the story, it seems there must have been someone who had some doubts about it.

Globaliser

But that's the point. At this level of complexity, it would be a very poor professional who did not have some doubts about it. There are doubts within every piece of serious advice that I give - it's my job to try to describe the level of doubt and the level of risk. The ultimate question is, are you (the client) prepared to take the risk? And that is what was being discussed in that exchange.

og

Sorry willyroo. I should have known better than that. You just can't trust those Chartered Accountants, can you .

abcedaria

Tax minimization scheme i believe sounds more legal But I totally agree with you. Sometimes they pass, sometimes they don't. My question is shouldn't have a ruling have been gotten from the ATO prior to purchase, or during the course of. I understand that you pays your money (or in the case you dont) and you takes your chances. You can't get it all thru, all the time, or else there would be little tax being paid.

Kiwi Flyer

There can be good reasons for not requesting a ruling.

sxc

Of course, if it turns out the ATO rules against Virgin, it's highly possible that Virgin can sue E&Y for giving bad advice.

abcedaria

I understand that also, which causes more questions than answers.

To be honest, theres just not enough information behind who said what to whom and when. We've been given the bare basic information from a legislative point of view, but no one knows which way the email trail points. And to be honest, who cares. It's fun for a giggle, but does it matter any more than that? They tried, they failed, they paid. We just dont know who was "they" for which part.