Summer 2006 Newsletter


Brave New World

Business Not Pleasure

Summertime Blues

All That Glitters...

Casting The Net

Trust Gordon?

It Ain't Over...

One In The Eye

Keep Your Nose Clean

Foreign Affairs

When Is A Car...

Don't Walk Away

Avoiding, The Issue

Brown Is Anti-PC

VAT's Up Doc?

Fuel's Gold

An Age-old Question?

That's Unfair!

Year In Year Out

How Hard To Try?

It's A Rip-Off!

Outlaws Win

Show Some Restraint

Not Our Problem

They Cannot Be Serious?


Pension Disappointments

Avoiding, The Issue

The European Court has recently ruled on the sort of big company tax avoidance that "other people do" - but it could affect routine and sensible tax planning that "you or I" might be involved in. The Halifax wanted to build a call centre and would have to pay VAT to the builder - as a bank, it wasn't entitled to recover much of that VAT. So it set up a chain of companies to sell building services to each other, and the end result appeared to be that the whole lot was recoverable. That was a legal way of achieving the same as paying the builder in cash and forgetting about the VAT altogether - not really possible if you are a bank!

The Court said that the scheme worked on the basis of the law, but Customs would still be entitled to deny the repayment because it was an "abuse of rights". That meant that it was clear and provable that the whole arrangement had been set up to get around the purpose of the law, even if it complied with the letter.

Although many people would agree that tax avoidance is a bad thing because it leads to unfairness - the rich pay their lawyers, and the poor pay the taxman - the problem is being sure of the boundaries. Tax law offers incentives, presumably for a reason: the Chancellor wants you to behave in a certain way, so he pays you to do so. If you take advantage of those incentives, at what point do you cross the line into "abuse of rights"? It's not always obvious, and the only thing that you can be sure of is that the authorities will draw the line in a different place to most taxpayers.

If you want to discuss ways of saving tax, we are always happy to help - but beware of schemes that appear to be "too good to be true"!