The issue of tax, or rather the avoidance of paying tax, has been high profile news thanks to comedian Jimmy Carr’s membership of an offshore tax scheme that enables its members to pay income rates as low as 1%. First revealed by The Times; the whole episode put Jimmy Carr’s finances uncomfortably in the public eye and, with David Cameron calling the tactic ‘morally wrong’, led to a humbling climb down.
While not illegal, the ‘K2’ scheme used by Carr is just the sort of aggressive tax planning strategy that can lead to intrusive interest in private financial affairs. It was Jimmy Carr’s celebrity status that compounded the public interest but, now that the furore has passed, the HMRC may well have questions of their own.
Even before the Jimmy Carr storm, HMRC were already focusing their attention on tax avoidance. Speaking to the BBC, Treasury Minister David Gauke said "Where there are arrangements that are artificial, that are contrived, that are not undertaken for any genuine commercial reason, but are purely designed to reduce tax liability, then that is something that we want to address.”
At Citimark, our experience and view of highly aggressive tax planning is that invariably it lands up in tears. We can quote more than one example where we know of people who have attempted to use various tax planning strategies which have received eminent legal opinion from top barristers only to be quashed by HMRC given that they operate a zero tolerance policy.
Clients are rarely set realistic expectations and undoubtedly will be scrutinised by HMRC with a fine tooth comb should they embark on any such scheme. Why risk putting your affairs under the microscope when HMRC have already pre approved a number of schemes which can provide substantial tax sheltering opportunities?
Both income and capital gains can be sheltered/deferred using a combination of Pensions, Enterprise Investment Schemes (EIS), Venture Capital Trusts (VCT) and Small Enterprise Investment Schemes (SEIS). In addition, aggressive tax planning often involves complex off shore structures and forfeit of the legal ownership of your assets - another risk factor when there are pre approved solutions much closer to home.
Substantial tax savings can be achieved for most UK resident clients without any risk of investigation whatsoever - it just needs careful planning.
At Citimark our Chartered Status ensures that your tax affairs will be managed by a highly qualified financial practitioner who will develop an in-depth understanding of your lifestyle objectives and challenges facing you and your family.
For a discussion on your tax affairs or any other financial matter, please contact us at Citimark Partnership on 01275 462469 or visit our contact page