Institute issues tax avoidance guidelines

The Institute of Chartered Accountants in England and Wales (ICAEW) has given its members new advice about “aggressive” tax avoidance schemes, including a reminder about an ethical code for tax advice.

As the political debate about tax avoidance intensifies, the ICAEW’s guide reminds its members of the terms of its own code of ethics and its guidance on professional conduct about tax.

The guide also advises accountants about things to bear in mind when advising their clients about tax.

Continued...

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Comments
ShirleyM's picture

Just more noise?    1 thanks

ShirleyM | | Permalink

Is this just talk, or will there be action?

bookmarklee's picture

Vindicated    2 thanks

bookmarklee | | Permalink

I am delighted to see some new clear statements from the ICAEW on this topic. 

Over the last few years some commentators have sought to persuade accountants that they have a professional obligation to notify clients of all possible tax avoidance schemes. And that failure to do so could render the accountants subject to negligence claims.

I have long pointed out that this attempt to promote 'abusive' tax planning schemes is nonsense. It is simply scaremongering and that no such negligence claims could ever be sustained. On the contrary, professional accountants would think twice before promoting schemes that may ultimately prove to be ineffective. Counsel's opinion that a scheme is 'legal' does not guarantee it will be successful and most schemes, once challenged, take between ten and twenty years to be finally resolved. This level of uncertainty appeals only to a minority of clients so accountants who chose NOT to talk about such schemes with clients were making a prudent decision.

Gets off hobby-horse and returns to work...

Mark

Cash transactions    1 thanks

Roland195 | | Permalink

I am waiting on the edge of my seat for the Institutes' guides to cash based businesses in the current political climate. This will be far more relevant to my work and that of the majority of practicing accountants who have no doubt been advising clients to run a mile from the "Smart Alec" schemes all along.

 

I just wonder how many    4 thanks

justsotax | | Permalink

ICAEW members are senior employees/partners within the respective firms peddling these schemes......(wonder how many are within the committees of the ICAEW....)

carnmores's picture

its not an institute    3 thanks

carnmores | | Permalink

its a cartel run by bureaucrats  :-)

 

mydoghasfleas's picture

Oh dear that did not last long

mydoghasfleas | | Permalink

12:08 tried the link to ICAEW tax avoidance helpsheet.  The response

 

404 - File or directory not found.The resource you are looking for might have been removed, had its name changed, or is temporarily unavailable.

Is it being rewritten already?

PI Underwriters running for the Hills?    1 thanks

malcolmrichards | | Permalink

Renewal Endorsements stating 'no tax avoidance schemes' ?

Or higher premiums to cover 'notifications' which do practioners prefer?

 

Surely the law is the law ?    11 thanks

mickeyparish | | Permalink

How can anyone legislate against "smells" ?

In all aspects of our legal life as a society, the law is constantly being tested in court.  Those who are willing to run edgy schemes should simply receive proper unbiased advice as to their chance of success, and if the courts take down the schemes, suffer the penalties. 

Exploring untested areas of law is NOT the same as criminality.

Moralising about taxation will get us nowhere. 

One might as well ask:  where are the voices questioning the irresponsible and therefore equally socially corrosive and astronomical levels of current public expenditure ?

listerramjet's picture

oh what a shame

listerramjet | | Permalink

The law already stacks the cards in favour of the legal profession when it comes to offering tax planning.  All this does is push tax planning further away from the profession.  Is that really a good thing?

If GAAR was applied to banks there would be less tax to avoid    1 thanks

peterhool | | Permalink

The Web of Debt is a fascinating book http://www.webofdebt.com/ which suggests that most of the tax we pay effectively pays interest to the banking system on Government Debt borrowed from the Banks who create money out of nothing. The alternative is for the Government to create the money interest free for itself and thus reduce or abolish taxes - problem solved!

Perhaps the avoidance 'brains' could be better employed examining the issues raised in this book then they could receive the 'bankers bonuses' for doing something more useful than the games played by bankers with unreal money.

carnmores's picture

i suppose its a logical follow on

carnmores | | Permalink

to the MLR that anyone now paying in cash is complicit in a crime if they are aware tha the trader in receipt is unlikely to pay their tax (CIOT) , what has the world come to?

"by the use of artificial devices"    13 thanks

parsonsmg | | Permalink

If they are artificial, they fail, Ramsay.

Simples

 

However, if they are bespoke planning and perfectly legal :-

Clyde:-

"No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores"

Tomlin:-

"Every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be"

 

If you don't like it, change the law, speak to your MP and make them do it, "they" have the power, but so do you.

Sorry to be blunt, but this subject is getting on my goat a little, with too much press time, and too much attention on a subject that has been around for more than a century.

Because we are tightening our belts we shouldn't be doing it?

Absolute rubbish, because the law is written so poorly, and it's legal to do so, why shouldn't we.

Free cash - do you want some?

Oh....you don't ......why? 

Oh.....so it was ok when we all had money 10 years ago, it was fine then, but despite it STILL being legal and wholly within the law, and the fact UK PLC has gone down the pan you don't want to anymore? Oh well, good boy/girl, how about 50% tax then instead of 40%?

Oh- you've changed your mind, 50% a bit rich?

50% tax pushed some of my clients into tax planning - and a net loss to the treasury on my portfolio. They got greedy, pushed clients into planning and now "they're all doing it". Treasury lose, clients win, but "we" (and I think I mean all people in the UK) probably all lose maybe.

We change our minds too quickly and change the law so slowly. 

GAAR was announced and then we spend a year debating it, consulting, considering, revising and this is the aftermath of Tower MCashback, Artic Systems, etc, etc.

The law is easily changed if we spend less time on yarboo point scoring and more time on pushing law through the houses.

It has been done before, can be done again, but it's still not done.

So we don't........so don't moan......... 

Having said all that, what's the fuss about?

The profession was doing gold bonus schemes for Directors to avoid national insurance 20 years ago. It was accepted practice then, so gold gets changed for coffee beans, to diamonds to sponge and I think art, boats and fine wines were in there somewhere along the way, and finally you can't do it, because after 20 years the finance acts were written correctly to capture such cash and cash equivalents, and accepted traded markets and, and and and ....... in entirety, finally.

My solution would to have got it right first time, it's less painful, takes less time and usually yields more. If it looks like cash, we're taxing it as cash so don't try to disguise it. No appeal. See you in court if you think you've got a case, we don't. 

Pay the experts to write the law, make it bullet proof, and tax fairly. Not even going to start on political aspects of wealth distribution, social requirements, spending etc. This isn't the forum, but if its fair, people will pay, 50% isn't, 40% probably wasn't but 30% is probably getting there.

Oh, and can we start calling NIC tax? That's what it is, but often forgotten in calculations. 

If the differential between the advisor fees on tax planning and the tax rate is closer, why would you "take a chance" on a scheme to gain very little?

In summary:-

We operate in a moral vacuum, and we have a duty to our clients.

We are not agents of the Inland Revenue.

Clyde and Tomlin.

PI insurance - should you have recommended a perfectly legal and acceptable tax planning solution, or have you neglected your client by not making a recommendation, however morally repugnant the suggestion may appear?

You don't have that luxury - give the advice - the client decides

Anyone want my soap box, I've finished with it

Institute jumping on public hysteria bandwagon    3 thanks

Alf | | Permalink

Like others I believe that unless the yardstick is whether the avoidance is legal or not we are in a very grey area as there are many different moral viewpoints.

The Institute seems to have just jumped on the public hysteria bandwagon (which I believe to be mainly fuelled by the press). I would have thought that accountants are not there to act in the public interest (as I think the helpsheet mentions) - they are to act in their clients' interests (obviously within the law).

This will be just another grey area where accountants will now struggle to know exactly where they stand.

Also, having worked for 7 years in the tax department of a Big 4 firm, agressive avoidance schemes was where they made some big money.

Glad the Institute has listened    2 thanks

galmatthews28 | | Permalink

I read the ICAEW helpsheet yesterday and I was heartily relieved that the Institute has released guidance in this area. I think it is excellent that the Institute listened to its members, who were clearly asking for more help (myself included).

I have also had people tell me that it is our legal obligation to promulgate aggressive tax avoidance schemes. I did not enter this profession to be bullied into doing things that I did not believe was the right thing to do.

I know it is not a clear cut area but I am relieved to have the support of my Institute when the promoters start knocking at my door!

Help sheet location    2 thanks

jonbryce | | Permalink
johnjenkins's picture

Where HMRC go wrong    1 thanks

johnjenkins | | Permalink

most of the time, is that they tend to try and manipulate/change existing perfectly legal and longstanding principles (salary/dividend) in order to swell the coffers and leave the absurd mythical schemes costing Millions.

ShirleyM's picture

because @john    1 thanks

ShirleyM | | Permalink

It is cheaper to get more from the captive & compliant than pursuing these aggressive tax avoidance schemes through the courts, and also cheaper than creating new legislation to close the loopholes.

The country can't afford this aggressive tax avoidance, and it can't afford the means to stop it, either!

As an aside ... there is a lot of loud whinging (especially from the people using these schemes) when we get even more legislation to stop people using loopholes to avoid tax, and it is quite justified, as it makes complications for everyone, not just the people using the schemes. 

In the absence of serious    1 thanks

The Limey | | Permalink

In the absence of serious penalties, etc, aggressive tax avoidance schemes will always make financial sense for companies and individuals. If HMRC were serious about challenging them something would be done to address the underlying incentive structure.

Avoidance    3 thanks

mikefleming3028 | | Permalink

What`s the first question asked when considering any kind of scheme, its got to be has it got a QC`s opinion and can I see it (even if this is  out of curiosity only)

Who promote these kind of schemes and would they be able to do so without the support of some very very clever and well paid Tax Lawyers?

Who did HMRC go to when they wanted the question of a GAAR considered, well we all know the answer to that, Mr Aaronson QC a very very clever Tax Lawyer. Is it only me that see`s a contradiction here as the expression "turkeys and Christmas" comes to mind. Now I am not a very very clever Tax Lawyer, not a lawyer at all, but I can`t help but wonder if the GAAR as proposed by Mr A has some thing in it that I and everyone else has missed or has Mr A at a stroke potentialy put all of his fellow Tax Lawyers out of  a job or at the very least put a kink in their earning capacity?  

Three cheers for the Institute for "reminding" us of our resposabilities ethical and moral, I now eagerly await  the issue of similar guidelines by the Law Society, there is a limit of course as to how long I can hold my breath.

Any guess as when we see the Law Society/ Bar Council express any kind of opinion on the subject as if they do I am willing to make a donation of £100 to a Charity of their choice. I await their call. 

PS the donation if made will be in cash, should cause all kinds of problems, ethical and moral, as to whether to accept it or not. No doubt Mr Gauke will have some thoughts on this as well. 

johnjenkins's picture

Sorry ShirleyM    1 thanks

johnjenkins | | Permalink

but we have now come to a time when we no alternative but to spend loads a money on closing down mythical schemes. SME's do not have the money to cover this loss anymore. I have said this for a long time now that if the mega rich don't do something there won't be anything left to do something with. The country is graunching to a halt.

ShirleyM's picture

No apology needed John    2 thanks

ShirleyM | | Permalink

I agree they should be shut down. Maybe the people who promote or use these unproven schemes should be made to finance the closure (ie. pay costs & back taxes), rather than the long suffering taxpaying public.

Why now?    1 thanks

VIOLA26 | | Permalink

I do not recall any reminder of the ethical code for tax advice over the last 10-15 years especially when all national firms (no doubt all ICAEW member firms) were promoting tax avoidance schemes.   When everyone was feathering thier nests (surely that was when an ethics reminder was more appropriate) it was OK, now that the national firms have pulled out of the market and it is left to the few providers (many of the people in those provider firms themselves being ex Big 4) and given the media witch hunt going on it seems that it is considered the right time to bring ethics into it.   It is regrettable that the ICAEW CIOT and STEP have all jumped on the media hyped tax avoidance bandwaggon without taking the views of its entire membership.  It all smacks of double standards to me.

Nick Graves's picture

Indeed    1 thanks

Nick Graves | | Permalink

peterhool wrote:

The Web of Debt is a fascinating book http://www.webofdebt.com/ which suggests that most of the tax we pay effectively pays interest to the banking system on Government Debt borrowed from the Banks who create money out of nothing. The alternative is for the Government to create the money interest free for itself and thus reduce or abolish taxes - problem solved!

Perhaps the avoidance 'brains' could be better employed examining the issues raised in this book then they could receive the 'bankers bonuses' for doing something more useful than the games played by bankers with unreal money.

 

Usury (fractional reserve) banking is a Ponzi scheme & thus illegal from the off. The banksters are generally complicit is the most aggressive tax avoidance schemes, money laundering etc, etc.

The politiciunts are however, dependent on them, in order to print money for their latest power/vote-grabbing schemes.

The banksters are protected from competition and the attention is diverted into all the evil shopkeepers using avoidance in order to minimise their tax liabilities - conflating avoidance & evasion being a useful first step. Thus, the only avoidance schemes may be reserved for the high-echelon cohorts exclusively.

It is thus difficult to be a High Street accountant these days. Far better to get a job on a committee pontificating about it than do all the tedious stuff...

 

 

 

 

 

Melt down point passed

The Black Knight | | Permalink

A few words that the ethical will read is not going to do anything.

both evasion and avoidance need tackling as separate issues.

More resources are needed and a lot more public hangings.

Even the smaller clients are coming under pressure to enter into no tax at all schemes luckily at the moment many see them for what they are, but attitudes can change.

The tribunals are already 38 years behind so you can effectively defer your tax until after you are dead (bet there's some planning going on around that) by the time the tax man gets his hands on it it will have long since passed to someone else.

If the government were really concerned about tax avoidance they would change the law! Wouldn't they?

and if they were concerned about evasion they would enforce the law! Wouldn't they?

One can only conclude they are not really bothered about either?

johnjenkins's picture

As I have said before

johnjenkins | | Permalink

We used to have the "status quo". Unfortunately to finance his incompetance GB (sorry ShirleyM) moved the goal posts and this is the mess we have ended up with.

Re your last paragraph....    1 thanks

nickja | | Permalink

.....are you deaf?     What has the coalition government been banging on about for the last two years?

Re your penultimate paragraph:   But it's acceptable to moralise about the poorest and most vulnerable in our society?

Hypocrisy smells and there's no legislating against that either.

 

 

tax avoidance/evasion    1 thanks

davidjafrost | | Permalink

At one time tax rates were at 98%. Would we have had such qualms re tax avoidance in those days? Or was it seen as the taxed taking action for a more reasonable net of tax result? Should it be any different now with lesser tax rates (albeit still high enough to be counter-productive)?

And if we cancel the more extreme forms of tax planning, the milder forms will then take their place at the upper end of tax planning with no doubt renewed calls for action against them. So where does the cut off point lie?  Surely it is impossible to legislate in an accurate enough way  to avoid further opportunities for planning?

Planning steps are either legal or not. If not, then they will be found to fail even if it takes the Courts to so decide. If legal, then it is for the taxpayer and adviser to decide if they want to proceed. I have always found that when the costs of schemes are weighed against the possible tax saving net of fees and the risk of having to fund a prolonged argument with hmrc involving the Courts, most clients decide in favour of safety first.

It is clearly wrong to allow a client to proceed with tax planning that is illegal but is is equally wrong for a GAAR to deny legitimate planning that has not been shown to be wrong. I recall that Justice Walton many years ago said that one should be taxed by the clear operation of law not untaxed by concession. It is also wrong in principle to be taxed by GAAR not by the clear operation of law.

And nothing I have said above should be read as condoning tax evasion as that is clearly wrong and to be eschewed. I do however have some concerns that hmrc may over time use GAAR in a way which is equally as unacceptable as tax evasion is now.

 

 

Untested area of law

princeusus | | Permalink

I support mickeyparish comment. The richness, the grandeur of English Legal system came about because people are willing to take on "untested areas" of law. Without taking the risk, this will not happen. Its important to note the fact that it goes with risk, if the Courts disagree with you, then we know its the law. It is quite different from criminality. Its interpretation of law.

Does anyone have a copy

mackthefork | | Permalink

As I am desparate to read this document, have the ICAEW pulled it because it is counter to members interests?  Can we remind them of the importance of ethical behaviour and especially integrity and objectivity? Hem (clears throat)

MtF

GAAR and banks

mickeyparish | | Permalink

perhool's comment brings to  mind that our bank ( which shall remain nameless, but is now partly nationalised ) was, when it was still independent, actively and through its relationship managers, pushing Employee Benefit Schemes at us quite hard.  In 2008 I think.  I wasted quite a bit of time on the internet deciding I didn't like the smell of EBS and walked away.  How many other directors of SME's took it up ? How about an EBS mis-selling bandwagon, eh ?

 

 

Nick Graves's picture

I'd forgotten about that!

Nick Graves | | Permalink

Mickey; I did exactly likewise about that time.

I'd forgotten how hard they were being pushed by the banksters - well remembered!

 

 

 

Good to see    1 thanks

Cloudcounter | | Permalink

that our esteemed ( by some, allegedly) is issuing crystal clear guidance on this including such incisive comment as "if it seems too good to be true".  That's really clear thinking.

And throughout this whole episode, with the hysteria of righteous indignation at those who try to reduce their tax bill, I can't see too many people querying why the government has to take such a large share of everybody's income.  For a simple basic rate employee it's 32% before spending taxes like VAT and excise duty.  In fact the Adam Smith Institue calculates that every penny earned by an average tax payer up to 29 May goes to the state - that's over 40% iof the year's income.  For Mr Average, not Mr Tycoon.

Sure we need public services but in the recent debate nobody seems to question the "right" of government to take what it likes.

Our public sector is a bloated self serving drain on taxpayers.  Just as the institute is on its members.

Nick Graves's picture

Whether public services    1 thanks

Nick Graves | | Permalink

is the right way of doing things is also open to debate; since politburos cannot price anything as efficiently as the free market, they will always trend towards buraucracy & inefficiency toward ultimate collapse. Just ask the Romans. 

The economic hard down scheduled for 2014-ish ought to liquidate inefficiencies, including many of the politiciunts and their bankster co-conspirators. Somehow, I don't believe they'll allow that to happen & will continue to find more & more ways to increase the tax burden on the upper-middle earners (like many beancounters!) who are the only net payers of tax at high marginal rates.

So the propaganda will only increase from here on in...

 

 

I assume everyone qualified

Frustrated Acco... | | Permalink

I assume everyone qualified under the basis that tax evasion was wrong (and illegal) but avoidance was fine  - what was it Lord Clyde said?

No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores.

or Lord Tomlin

Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.

Whilst this sounds fine in principle that won't be the case when there is a borderline example and the person is disciplined - potentially even if they don't lose their case with the Revenue. Nowadays in my personal opinion unless you work in a large firm or audit, continued membership of an Institute post qualification is a very dangerous place to be for no discernible practical benefit.
 

Soap Box Part 2    2 thanks

Mister O | | Permalink

Brilliant use of the soapbox, thank you. Saved me from getting mine out. Just back from my holidays today and don't quite feel in the mood for uplifting speeches, so will stick to adding my endorsement to yours.

Why is everyone else missing the point? Public spending is out of control, and creates an unacceptably high demand for taxes. 50% tax on income is not "paying your fair share" as politicians love to spout, and 40% probably isn't either.  Especially on top of 20% VAT on everything we spend, plus duty on petrol, and alcohol, and aeroplane seats, and insurance premiums, as well as the business rates I pay while getting no local services whatsoever (as I don't live in the same area as I work), and the employer's nic I pay for the priviledge of employing people, and the council tax I pay at home. And if I can survive all that, and have the audacity to have any money left when I fall off my mortal coil, HMRC will stick its Inheritance Tax shovel in for another 40%. To me that is morally repugnant.

And all we get from politicians is rhetoric. Talk about morals. (Why can't I get the words 'pot, kettle, black' out of my head?)  Noone with the vision to lay down a plan for the future growth and well-being of this state.  The reigning in of the jobs for inspectors and supervisors and over-seers and tin-pot Hitlers to cut public expenditure and/or divert our funds to the front-line in our crumbling education and health services despite record levels of expenditure. Of course that would need a long term plan, and governments only have a short-term objective - to get re-elected.

Only reducing taxes and delivering some value for money will persuade people to pay their 'fair share'.  Until then, people will take advantage of whetever legal means are available to avoid what they see as an unfair and excessive tax burden, which is then largely wasted by those in power. 

(And I wasn't going to get my soap-box out today!)

Lower    1 thanks

The Black Knight | | Permalink

Lower Tax, less Government = private sector growth more competition and less waste  = more money for everyone!

don't think it will get rid of avoidance or evasion? only law and enforcement will do that.

Clients still grumble about 20%

Trouble is the more tax they have the more they will spend on things we don't need or want?

Nick Graves's picture

Lessens it, though!

Nick Graves | | Permalink

Eny fule no if you lower the tax rate (especially once it approches the 50% point on inflection) you increase the overall tax take!

Except the fules in power, apparently. That would encourage the free-market & thus reduce enslavement.

 

ShirleyM's picture

I will play Devils advocate

ShirleyM | | Permalink

Reducing the tax rate would probably result in lower gross pay. All the employers that are mean (not with their own wages or pensions) would tell their employees they are better off so they don't need a pay rise.

They don't    1 thanks

The Black Knight | | Permalink

ShirleyM wrote:

Reducing the tax rate would probably result in lower gross pay. All the employers that are mean (not with their own wages or pensions) would tell their employees they are better off so they don't need a pay rise.

They don't anyway! LOL

no pay rises until we know how much the pensions hit will be?

 

but they could afford a holiday, pension or new car or more shopping anyway which would multiply and produce more GDP that would be taxed again?

House prices might even retain their value? Securing borrowing for investment.

After all these things are all relative.

a return of confidence? out of recession.

wage costs lower for inward investment, more employment = less benefits = lower tax = more growth

Why not? because someone must have a vested interest? Who benefits from the crime is what we should look at?

added to which anyone who takes the piss after that is morally corrupt and David can swing for them in the House brother.

Artificial!? Aggressive!? Moi!?

Mister O | | Permalink

Of those who talk about steering clear of "aggressive" or "artificial" strategies, I would like to know if their attitude is the same towards the multitude of "contractors" who fly in the face of IR35. When doing their accounts, do you advise them not to take dividends because that aggressively and artificially reduces the NIC they should pay? Do you advise them not to give shares to their non-working spouse because that aggressively and artificially  reduces the overall amount of tax they pay? And do you submit a money-laundering report every time you are approached by one of these "contractors" in the hope that HMRC will take action to make them pay "the correct amount of tax" or their "fair share"?  Or is this perfectly acceptable, main-stream tax planning for someone who we all know is really an employee? Please explain to me where the dividing line is!

the difference

The Black Knight | | Permalink

Artificial flies in the face of substance over form! and is usually just a paper exercise that sometimes relies on the bending of the facts.

A PSC company is a company an not an illusion.

PSC's I have no doubt many fail on the lack of what really took place. The rest is down to a question of fact how you treat the transactions for tax and accounts.

Often you will not have sufficient information to make that call anyway.

We advise pros and cons and let clients make that call with a disclaimer from us.

Again all of this is caused by badly thought out legislation.

IR35 was a pigs ear backed up by a lack of enforcement much the same as all of the new legislation over the past 15 years or so.

Added to which all these PSC's sudo government employees create the illusion that we still have some industry in the U.K. ?

The line is when it is artificial and clearly not the reality of the situation?

PSC's aside small companies reinvest these small tax savings to enable them to grow and employ more staff (on which the government collect a hefty NIC bundle).

Tax is not just about taking and spending it is about influencing economic activity! A thing we all seem to have lost sight of in the last few years.

johnjenkins's picture

IR35 is just as

johnjenkins | | Permalink

artificial as some tax saving schemes. It just happens to be a tax generating scheme that catches SME's. As I have said many times it is not up to HMRC to decide employment status. That is for the supplier of work and the worker. Then they are taxed accordingly.

mydoghasfleas's picture

Fair share

mydoghasfleas | | Permalink

Pay Tax: verb irregular conjugated as follows when used in context of "fair share"

I pay too much tax

Thou payest the correct tax

He, she, it pays too litte tax

We pay too much tax

You pay a fair share

They pay to little tax

Imagine I earned £50,000 this year but as I had an inheritance last week I put £33,600 (net) into a pension scheme, I would pay no tax as the basic rate is recovered by the pension provider.  Is this tax avoidance (my income was £50,000 and I paid nothing)?  Have I paid a fair share of tax?  Is it unacceptable?

Where someone organises the refurb of a qualifying property and sells the package on as it qualifies for BPRA under Part 3A CAA 2001, which provides for 100% allowances on expenditure, it is notifiable under DOTAS.  This is not some complicated scheme, if an indvidual bought the deal straight from the developer it would not be notifiable; it simply means that an unused building is brought back into use for business purposes in a disadvantaged area.  HMRC considers it notifiable because it generates a sideways relievable loss. 

Q Why is there a loss? 

A Because a 100% capital allowances rate was introduced to incentivise the investment.

Q Why am I going on about this?

A Because it is treated as tax avoidance.  There is no artificial aspect to it.  There is no provocation to it.  HMRC and the promoters have agreed to a procedure for dealing with claims at promoter level without any coercion.  The DOTAS notification serves only to give HMRC statistics to say, "look we have found more avoidance!"

Glass of milk and Tamazepam time again; this happens every time the nurse is late with sedating me!

 

GAAR IS ON THE WAY OUT AS AN IDEA AND WONT HAPPEN

david5541 | | Permalink

A groundswell of concern to the government’s General Anti-Avoidance Rule (GAAR) proposals is gathering momentum.

Both the Confederation of British Industry (CBI) – which has just submitted its response to the government’s consultation on the UK’s proposed tax avoidance legislation - and the Association of Corporate Treasurers (ACT) are just two bodies to air their doubts.

John Cridland (pictured), CBI director-general, said: ‘The CBI supports a GAAR which is proportionate and focused on highly abusive, artificial avoidance schemes which serve no commercial purpose. We are concerned that the latest proposal is too broad and could affect not just abusive transactions but also straightforward tax management, which is an essential business function.

‘We are also concerned about the independence of the GAAR panel which currently has HMRC acting as ‘judge and jury’. We want to see a panel that is made up by a majority of tax experts who are non-HMRC members.’

In June, the government published its formal consultation on a GAAR targeted at artificial and abusive tax avoidance. The consultation ended on 14 September.

The GAAR will result in considerable uncertainty among ordinary non-financial companies as to what falls within it,’ he said. ‘At this point in the economic cycle it would be a mistake to introduce something that chills growth and investments from not only indigenous but also foreign firms.’

Members of the UK200Group of independent accountancy and lawyer firms have also stepped into the fray.

One of them, David Ingall, a consultant at York-based accountants, JWPCreers said: ‘Let us get this straight; essentially the GAAR says that, whatever the tax rules, if HMRC does not like what a taxpayer has done, the rules allow them to challenge and tax a transaction according to their view. For those involved in aggressive tax schemes, this might be justifiable but (and it is a very big but), inevitably the innocent will be caught as, to be workable, the rules have to be so widely drawn.

‘One suspects HMRC’s view is that there is no such thing as an innocent taxpayer, and that is where HMRC’s aspirations are potentially in conflict with the hope for economic growth and regeneration.’  

 

ACT chief executive, Colin Tyler, echoes similar sentiments, saying that while his organisation was supportive of the principle of reducing abusive tax schemes, feels HMRC's proposals are too wide in scope.