Answers to your fi nancial questions
And the pressure continues to
mount. In January this year the Crown Prosecution Service (CPS) indicated that it would no longer treat tax avoid- ance as a victimless crime. In their sights are Britain’s four biggest account- ancy fi rms who have created no fewer than 79 tax avoidance schemes in the past three years, disclosed to HMRC under the Disclosure of Tax Avoidance Scheme (DOTAS) rules. A key weapon against tax avoidance, DOTAS requires any promoter or creator to tell
taxman about any fi nancial planning where a ‘tax advantage is the main benefi t or one of the main benefi ts of the arrangement’. A spokeswoman for PwC said of two particularly aggressive tax avoidance schemes, they ‘no longer recommend planning of this nature’ as the tax environment has ‘moved on’. There is also a General Anti-Abuse
Rule (GAAR) coming into force this month which will render many tax planning arrangements with a tax avoidance motive as ineffective. Individuals should be wary of
advisers who offer schemes that appear to be too good to be true. ‘There needs to be substance behind
any arrange-
ments as otherwise they won’t be supportable
and will ultimately fail’, warns Chopra. ‘Each indi- vidual
tax adviser differs
in their appetite for imple- menting aggressive tax avoid-
ance arrangements though one thing
is certain, at the more aggressive end of the scale, the planning is unlikely to be effective in the long term’.
UNIVERSAL BENEFITS TO STAY Downing Street has announced that universal benefi ts for pensioners will be protected for at least a year after the 2015 General Election. The statement was released after speculation that a number of benefi ts – such as the winter fuel allowance, free TV licences and bus passes – would become means-tested. However, the government has stated that all of these benefi ts will remain until at least April 2016.
Arguably, what’s not helping is the
spate of news articles over the past few months detailing a number of multinational companies like Star- bucks, Amazon and IBM who have been accused of paying minimal or no corporation tax into the Govern- ment’s coffers. To give you some fi gures, a number of
IT companies the
‘with lucrative government contracts’ have been accused of underpay- ing tax by £800m; online bookmak- ers and casinos have avoided paying around £1bn. This month a new employee share-
holder scheme comes into play, whereby employees can subscribe for shares in the company they work for in return for relinquishing some of their employment rights. The perk is that they can dispose of these shares at a later date, tax free. Other schemes offer a range of tax benefi ts. The idea behind the Enterprise Investment Scheme (EIS) is that investors receive tax breaks if they put their money into helping risky businesses grow. According to Crandles & Co Financial Planners the EIS scheme is the only UK scheme to offer Capital Gains Tax (CGT) Defer- ral, and also offers substantial income tax relief, capital gains free growth and, through Business Property Relief, relief from Inheritance Tax (IHT). With increasing public demand
for high earners as well as big corpo- rations to pay their fair share, guid- ance on legitimate tax-effi cient money management is at a premium. Getting good quality advice at an early stage can save a lot of time, money and ‘diffi culty’ later on.
CARBON’S GROWING FOOTPRINT Carbon Financial Partners has been named Investment Adviser of the Year at the prestigious Professional Adviser Awards 2013, held at London’s Hilton Park Lane. The Awards are the must attend adviser event of the fi nancial services and celebrates the very best of the UK fi nancial services industry.
Ask the experts
Q: THERE HAVE BEEN A LOT OF INVESTMENT TIPS IN THE PRESS DURING THE FIRST FEW WEEKS OF
2013. WITH SUCH A VARIETY OF OPINIONS, WHICH, IF ANY SHOULD I BELIEVE?
A: Looking back at last years predictions helps demonstrate why following them is bad for your wealth. Experts on both sides of the Atlantic warned at the start of 2012 that it would be a lean year for equities. Acting on that sentiment would have been very costly.
One high profi le ‘Head of Equities’ tipped three things to out-perform in 2012; the US stock market, the UK pharmaceuticals sector, and at stock level, Vodafone. Ultimately, large US companies
delivered broadly the same return as their UK counterparts, so you wouldn’t be dining out on that tip. If you had simply invested in the entire developed world’s stock market as represented by the FTSE World index you would have enjoyed a healthier gain of nearly 12%. Pharmaceuticals fell by 1.82%. Ironically, telecoms were up 30.38%, and the much unloved banking sector was up by 39.64%. Again, if you’d just bought the whole UK market, ie. the FTSE All Share index you’d have enjoyed a 12.3% gain. Finally, Vodafone, the top tip, actually
lost money. The shares fell by 8.5% meaning that they underperformed the FTSE All Share index by nearly 21% in a single year. So much for experts being able to predict the future! You can waste a lot of time and money predicting markets and making decisions about your future wealth based on what the expert forecasters think will happen. The truth is that they get it wrong more often than they get it right.
Barry O’Neill, Investment Director Carbon Financial Partners Tel: 01224 619215
www.carbonfi
nancial.co.uk
YOURSF
TO HAVE YOUR QUESTIONS ANSWERED EMAIL THEM TO EDITOR@SCOTTISHFIELD.
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