What are the risks?
Tax avoidance is about using the tax rules, structuring your affairs in a way that is within the legal rules…but to achieve a lower tax bill! The difference from tax evasion is that evasion conceals or hides income from the tax man. HMRC themselves say that tax avoidance planning “involves operating within the letter – but not the spirit – of the law”. Importantly, tax avoidance is legal and, for example, the case of Duke of Westminster v IRC (1935) confirmed the principle that there is nothing wrong in arranging a taxpayer’s affairs, legitimately, so that they pay less tax than they might otherwise have paid. Broadly if there are a number of legitimate ways to arrange a transaction, it is acceptable to choose the method that results in the lowest amount of tax becoming payable.
But the risk is that the taxman, acting in their role as protector of the revenue base, will challenge the tax planning. If HMRC are successful in challenging the tax planning then they have proved that the planning didn’t work – which obviously means that you have a tax bill….and have paid fees for nothing.
Several politicians have said that there is a moral choice to be made. This implies that taxation is moral – but it isn’t. Taxation is a set of legal rules and, as the Duke of Westminster case demonstrated, you only need to comply with those legal rules and not the politician’s wish to collect lots of tax money from you!
Clearly tax isn’t moral – but its not fair either. Otherwise why do some people pay tax at 50% and other people at 20%?
Most tax planning works. So it’s good, but it’s not too good to be true! Nonetheless it also doesn’t work unless your circumstances fit – so if it’s not right for you, we will tell you. Equally make sure you use good tax planning! That is planning that has been researched and carried out properly. And that is where we come in, because we only use tax avoidance planning that has successfully gone through a robust due diligence process.
But to come back to risks, tax avoidance planning carries an inherent risk that HMRC will successfully challenge it and before using tax avoidance planning you have to be comfortable with that risk.
But equally you need to find out more about the strategies and what opportunities could be available to you. Some tax strategies are straightforward and utilise main-stream tax planning. Others are more cutting edge. We will always give you full information about the levels of risk so that you can decide if it is right for you. Tax strategies really are individual to you or your business, which means that we need to speak to you in order to advise you in the best way.
It’s not what you earn but how much you keep that counts! And, lets face it, we want you to pay the right amount of tax. But that might just be a whole lot less than you think!
You could do nothing about planning your tax situation – it is an option. However, by actively choosing this option through your inactivity, you are effectively handing over your hard earned money to the Government by paying more tax than you need to!
So, what are you waiting for? This is your personal invitation to call me now on… 01234 752566
Get In TouchJonathan Vowles
114 High Street
Tel: 01234 752 566
Fax: 01234 752 577
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