YO money UR Taxing lyrical
When does good fi nancial planning become tax avoidance and has the death knell already sounded for tax avoidance schemes?
T WORDS ANYA HART DYKE
‘Be wary of advisers that offer schemes that appear to be too good to be true’
ax is paid on most fi nancial transactions we make – when we buy or sell something, when we
get paid, when we pass money to others. Although everyone should be subject to the same rules, the playing fi eld is not level. But a word of caution to those tempted by elaborate tax avoidance schemes; they are no fail-safe option. One such scheme, based in Jersey,
was brought to the public’s attention last year because of comedian Jimmy Carr’s involvement in it. But according to The Sunday Times there are an esti- mated 41,000 tax avoidance schemes ‘known to HMRC’ (and many more that aren’t?) that allow individuals to legally avoid paying tax. In Jimmy Carr’s case he was alleged
to be involved in a scheme that enables members to pay as little as 1% income tax. The benefi ts are obvious. So what would make people cough up? HMRC has tried guilt-tripping – the tax avoid- ance impacts on public fi nances – or issuing warnings over potential interest charges and penalties. But these avoid- ance schemes are legal and HMRC must take each one of them to court in order to extract these charges. Questions are being asked as to whether HMRC is
suffi ciently resourced to pursue each and every incidence of aggressive avoidance. The concern is that HMRC is due to see staffi ng levels cut by 44% on 2005 levels by 2015. But the tide may be turning. ‘Tax avoidance is very topical
just now’ says Vishal Chopra, Tax Director at Grant Thorn- ton. ‘The difference between tax evasion and tax avoidance has for years been widely understood but in recent months the press and the wider public have been questioning the morality of tax avoidance’. Earlier in the year Belgium’s Dowager Queen Fabiola was accused of avoiding death duties by way of a private fund set up to channel money to relatives and chari- table causes. Similarly, HMRC is also closing in
on those with offshore accounts; those with
accounts in
Switzerland have seen the rules change. This year a new Swiss-UK tax agree- ment came into force that
requires account
holders to disclose their bank details. Those who owe tax can take advantage of the Liechtenstein disclosure facility whereby they are immune from prosecution and only pay tax backdated to 1999 rather than 1989. Those who don’t come forward and are caught out face a penalty of up to 200% of the sum owed, in addition to the tax due.
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West is best The Technology Strategy Board (TSB) has announced that Glasgow has been chosen to receive £24 million of Government investment and will become the Future City Demonstrator for the UK, showcasing the best the UK has to offer to a £220 billion global market for integrated city systems. Glasgow’s success has a lot to do with its preparation for the 2014 Commonwealth Games, which brought the right people together to look at the performance of the city as a whole.
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