Depends on your viewpoint
This year tax has been splashed over the front pages of the papers. HMRC agreeing sweet deals for big businesses – celebrities using tax avoidance schemes – government organisations being managed by people outside the PAYE system. Some react: ‘Shocking, they should be paying more tax.’ Others say: ‘Shocking, why am I not doing that?’ People have different attitudes – most would prefer lower tax bills, but how far would you go to achieve that?
There are plenty of ways to cut your present or future tax bills without raising HMRC’s pulse-rate. Some are described in this newsletter. The main risk with these ideas is that they aren’t properly put into effect. We’re always happy to discuss with you what you could save, and make sure you do whatever’s needed to make a plan effective.
Then there are plans which are more arguable. Some are well-known, such as using a personal company to ‘disguise employment’ in order to avoid PAYE and NIC. HMRC have recently published a new set of guidelines on ‘IR35’ – their countermeasure – that clarifies how they intend to police the boundaries. If you supply your own services through a company, we can check how it looks in this new light. HMRC may be doing the same.
Other schemes, with code-names and confidentiality clauses and artificial transactions, come with substantial risks. If HMRC attack them, participants could incur legal costs even if they win. If the plan doesn’t work – as the Court of Appeal recently decided on a 2003 scheme to make an £11m gain ‘disappear’ – there may be penalties and interest to pay as well as the tax and the costs. And even if they succeed, there’s the chance of bad publicity at a time when the press seems keen to sling mud at people who are not ‘all in this together’.
Next year, to add to everything else, we are likely to have a ‘General Anti-Abuse Rule’, which will attempt to make artificial plans ineffective anyway – once the lawyers have finished arguing about what’s artificial.
Whatever your attitude to tax, we are here to help.