FEATURE: FINANCIAL & LEGAL


tax evasion amount to the same thing, but of course, the former is legal and the latter is not. They have then gone on to try to make a distinction between what is ‘acceptable’ tax avoidance and what is ‘unacceptable’ tax avoidance. Again this is emotive, what is acceptable to someone may be unacceptable to someone else. The Government would argue that Individual Savings Accounts (ISAs) are in place to encourage people to save and ISAs have a clearly defined legislative footing. Therefore they are ‘acceptable’. However, tax planning using Employee Benefit Trusts (EBTs) to avoid PAYE and national insurance on earnings is regarded by HMRC as ‘unacceptable’. However, both save tax, pure and simple!


The reality is that government could stamp out tax avoidance at a stroke if it wanted to. There is currently consultation taking place with regard to the introduction of a General Anti-Avoidance Rule (GAAR). Business has mixed views on this because of the concern that a GAAR could have unintended consequences and affect normal commercial transactions. A GAAR pre-transaction clearance may be the answer to these concerns but is HMRC sufficiently resourced or prepared to invest in a


clearance resource by recruiting appropriately qualified and experienced tax professionals? Currently, in order to discourage taxpayers from perhaps flirting with tax avoidance in these times of austerity, there is current consultation around introducing a penalty. The proposal is that certain registered schemes that HMRC regards as ‘unacceptable’ would be earmarked. If the taxpayer doesn’t pay the tax upfront and the scheme fails, the taxpayer would be required to pay the tax and interest (as he does now) plus a 15% penalty. Whether this would achieve its aim is a matter of further debate.


Whether the introduction of a GAAR and, or, a 15% ‘discouragement’ penalty will reduce the appetite for tax planning only time will tell. In the meantime there is a range of tax planning strategies available to mitigate tax and these are of interest to many businesses.


Paul Captieux is tax partner at Clough Taxation Solutions LLP based at New Chartford House, Centurion Way, Cleckheaton, Bradford BD19 3QB and can be contacted on 01274 876333 or email paul.captieux@clough.co.uk


WEST & NORTH YORKSHIRE CHAMBERS OF COMMERCE 2011 41


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