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Post by SeanBroseley on Feb 14, 2015 21:04:03 GMT 1
A good proportion of tax planning involves placing money in products/schemes that are designed to exploit loop holes in tax law. That is not a working definition of an ISA. ISA is developed specifically as a tax avoidance tool ! There are Many such intentional "loopholes". You imply that there are shady schemes and ways around the tax rules that are unintentional and unknown - mmmm, no there are not. There are many many tax advisors in this country and any such schemes are perfectly out in the open - if a mistake is made in tax law it is a) rare and b) it is a quick and simple decision for HMRC to close the "accidental loophole"; if they don't then it's their decision just like launching an ISAAC and perfectly legal and accepted just like avoiding IHT by investing in forestry or making a PET. Firstly - ISAs aren't a loophole. Secondly - tax planning includes schemes that may or may not work but may very well do if HMRC do not look too closely at them. HMRC's view of a tax-planning arrangement can change when these become aggressively marketed. So I'm not implying this I am stating it as a matter of fact. PETs (Potentially Exempt Transfers) are interesting because their much reduced scope now compared to pre 2006 suggests that 1) the tax code evolves 2) HMRC's attitude towards previously uncontroversial planning changes to restrict it. 3) Therefore questioning the status quo in the tax code and its operation is legitimate.
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unclebob
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Post by unclebob on Feb 14, 2015 21:05:31 GMT 1
This attitude of only paying the tax that you can get away with has its roots in the greed culture of the 1980's. Who was the pm then? It was the one who turned a blind eye to pedophiles wasn't it? The one that sold off all the council housing and created a housing boom that keeps people homeless to this day. The one that lived in a home owned by a company in the virgin islands. What a great leader eh? Never let facts get in the way of a blinkered view eh ? Why don't you put them right then? Is none of what I wrote true?
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Post by mattmw on Feb 14, 2015 21:15:52 GMT 1
Agree with Sean don't think the ISA example is anything like the tax avoidance schemes that have been in the press this week ISA's are promoted by the government and open to everyone with the aim of encouraging people to save money, with the very small incentive of saving a little tax in the process (and most money invested will already have come from wages which have already paid tax). It's a bit like saying a pension scheme is tax avoidance Tax avoidance of the type in the press this week is much more complex, and only available to a select through who have the financial resources and connections to make the most of tax laws. Think its that which undermines the "all in it together" argument the government keeps making. If allowing people to avoid tax is acceptable all forms of it need to be open to everyone This I think is the heart of the issue - you are happy with a tax avoidance scheme like ISA which is accessible by all, but one that is open only to those with a certain level of income is not acceptable. Well, we do not live in a socialist paradise where everyone is equal and earns the same whether they are a nurse or an investment banker. There is tax law to make sure that everyone pays their fare whack - stick to the law and you should not suffer this grief. If there is something that you disagree with then its the law that needs to change and not the people who should be vilified for being law abiding citizens. But isn't that part of the problem that where the tax laws have been pushed to the edges or acceptability, and in some cases exceeded the authorities have been slow to act, investigate and make changes to the law. The government has managed to change policies on welfare benefits very quickly, but seems to have dragged its heals on tax reform. When members of their own party are directly benefitting from this lax attitude you can see why people get angry and cynical about the "all in it together" message we're supposed to be signed upto
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Post by percy on Feb 14, 2015 21:41:21 GMT 1
Firstly - ISAs aren't a loophole. Secondly - tax planning includes schemes that may or may not work but may very well do if HMRC do not look too closely at them. HMRC's view of a tax-planning arrangement can change when these become aggressively marketed. So I'm not implying this I am stating it as a matter of fact. PETs (Potentially Exempt Transfers) are interesting because their much reduced scope now compared to pre 2006 suggests that 1) the tax code evolves 2) HMRC's attitude towards previously uncontroversial planning changes to restrict it. 3) Therefore questioning the status quo in the tax code and its operation is legitimate. The Isa is a tax avoidance scheme; there are many open to everyone. The idea that one's you don't know about are "loopholes" whilst ones you do know about (or cannot or do not benefit from) are perfectly ok schemes is the heart of the problem imho. Tax planning schemes depend on HMRC looking at them closely or not ? Yes, there are thousands of tax advisors and HMRC know the schemes very quickly - the fact they choose to act or not is partly whether the effect was intended or not and partly whether they can be bothered. To say that they do not know about them or that they are in some way hidden is not correct. I have the list of schemes from 2 of the big 4 firms are they are identical - it may not be published on the web, but it's not secret from HMRC or anyone. the tax code evolves to remove mistakes, simplify administration and to reflect political will - I'd not choose pets as the best example of the first or third rationale. If there was an intent to stop rich people's tax planning (or avoidance) opportunities there are many easier targets.
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Post by percy on Feb 14, 2015 21:51:27 GMT 1
But isn't that part of the problem that where the tax laws have been pushed to the edges or acceptability, and in some cases exceeded the authorities have been slow to act, investigate and make changes to the law. The government has managed to change policies on welfare benefits very quickly, but seems to have dragged its heals on tax reform. When members of their own party are directly benefitting from this lax attitude you can see why people get angry and cynical about the "all in it together" message we're supposed to be signed upto This I agree is the heart of the problem - there is a gap between what people see as acceptable - if you do not have access to tax avoidance schemes then you think they are not fair, if you don't know about them you don't care. Welfare benefits and the abuse thereof has a dedicated newspaper - the daily mail - to highlight to us and so get addressed quickly. Many of these cases are just people playing the system for what they can rather than breaking the law. Tax avoidance schemes are of niche interest and occasionally complex - they are not such easy stories for the mass media so abuses are not closed down so quickly because HMRC does not feel the pressure to address them quickly. It is the world we live in.
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Post by Jonah on Feb 14, 2015 22:32:48 GMT 1
Jonah. Defending the indefensible. Love your ignorance Jamo?
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Post by Jonah on Feb 14, 2015 22:38:13 GMT 1
ISA is not a tax avoidance it is authorised by the government.
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Post by SeanBroseley on Feb 14, 2015 22:40:04 GMT 1
I haven't defined a loophole as an element of the tax system I don't know about. Those tax planning tools that I do not know about do not form part of my argument because - er - I don't know about them.
PETs are a very good example in fact precisely because they were the basis of a number of tax planning arrangements via trusts that were brought under the relevant property trust regime with its entry, exit and periodic charges thereby ending the (nonsense) distinction between interest in possession trusts with a flexible power of appointment and discretionary trusts.
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Post by SeanBroseley on Feb 14, 2015 22:45:21 GMT 1
But isn't that part of the problem that where the tax laws have been pushed to the edges or acceptability, and in some cases exceeded the authorities have been slow to act, investigate and make changes to the law. The government has managed to change policies on welfare benefits very quickly, but seems to have dragged its heals on tax reform. When members of their own party are directly benefitting from this lax attitude you can see why people get angry and cynical about the "all in it together" message we're supposed to be signed upto This I agree is the heart of the problem - there is a gap between what people see as acceptable - if you do not have access to tax avoidance schemes then you think they are not fair, if you don't know about them you don't care. Welfare benefits and the abuse thereof has a dedicated newspaper - the daily mail - to highlight to us and so get addressed quickly. Many of these cases are just people playing the system for what they can rather than breaking the law. Tax avoidance schemes are of niche interest and occasionally complex - they are not such easy stories for the mass media so abuses are not closed down so quickly because HMRC does not feel the pressure to address them quickly. It is the world we live in. But if tax avoidance schemes "are of niche interest" - how can you class ISAs as a tax avoidance scheme as anyone over the age of 16 can have one?
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Post by Jonah on Feb 14, 2015 22:46:21 GMT 1
Tax avoidance/evasion has been a game played for years and not just by the so called wealthy. The digital age has changed the traceability of money and will make it far easier to close loop holes.
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Post by SeanBroseley on Feb 14, 2015 22:50:40 GMT 1
ISA is not a tax avoidance it is authorised by the government. The HMRC agrees with you Jonah: "You are entitled to plan your tax affairs in a way that makes sure you do not pay more tax than you have to. There are many legitimate ways in which you can save tax, for example by saving in a tax-free ISA, making donations to charity through Gift Aid, claiming capital allowances on assets used in your business or paying into a pension scheme. But there is a big difference between using tax reliefs and allowances in the way in which they are intended to be used, and trying to bend the rules to avoid tax."
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Post by Jonah on Feb 14, 2015 22:56:46 GMT 1
Easy for the posters to be confused Sean?
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Post by camdenshrew on Feb 15, 2015 7:46:02 GMT 1
And as I understand it those that have paid back the money to the revenue have done with penalties and interest. Is that not punishment enough or shall we,waste more time,money and resources to take them through the courts for the same outcome? Shame this option isn't open to the benefit cheats who get prosecuted and sent to prison. Why should those who wilfully dodge their taxes - i.e. break the law - be treated any differently? By not prosecuting, it just encourages the practice of tax dodging to continue.
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Post by jamo on Feb 15, 2015 9:04:51 GMT 1
Jonah. Defending the indefensible. Love your ignorance Jamo? Where's the ignorance Rob? My point was that you appeared to be saying that tax evasion on a grand scale is ok and that once the people responsible for cheating The Exchequer out of hundreds of millions of pounds had been found out that it was also ok not to pursue them in the same way that HMRC pursues people who don't declare everything on their PAYE returns. I accept entirely that tax avoidance individually and corporately has always gone on but what I find hard to accept is the complete lack of accountability at corporate levels when it is discovered.
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Post by Deleted on Feb 15, 2015 9:15:03 GMT 1
And as I understand it those that have paid back the money to the revenue have done with penalties and interest. Is that not punishment enough or shall we,waste more time,money and resources to take them through the courts for the same outcome? Shame this option isn't open to the benefit cheats who get prosecuted and sent to prison. Why should those who wilfully dodge their taxes - i.e. break the law - be treated any differently? By not prosecuting, it just encourages the practice of tax dodging to continue. Because, as Jonah puts it, tax evasion/avoidance is only a game Camdenshrew! Cat and mouse capers! Nothing like the horrible scummy types involved in benefit fraud!
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Post by shrewsace on Feb 15, 2015 9:25:17 GMT 1
The 'ISA's are tax avoidance' line is a right wing trope punted out by w****rs like Peter Hitchens whenever the issue is debated. There's only one flaw in this argument - it's b******s. From HMRC's own literature... Avoidance is exploiting the tax rules to gain a tax advantage that Parliament never intended. It often involves contrived, artificial transactions that serve little or no commercial purpose other than to produce a tax advantage. It involves operating within the letter, but not the spirit of the law. It does not include international tax arrangements such as base erosion and profit shifting (BEPS). Measures for tackling this are overseen by the Organisation for Economic Co-operation and Development (OECD). The OECD defines BEPS as tax planning strategies that exploit gaps and mismatches in tax rules to make profits disappear for tax purposes or to shift profits to locations where there is little or no real activity, but the taxes are low resulting in little or no overall corporate tax being paid. Tax avoidance is not the same as legitimate tax planning. Legitimate tax planning involves using tax reliefs for the purpose for which they were intended. For example, claiming tax relief on capital investment, saving in a tax-exempt ISA or saving for retirement by making contributions to a pension scheme are all legitimate forms of tax planning.www.gov.uk/government/uploads/system/uploads/attachment_data/file/364009/4382_Measuring_Tax_Gaps_2014_IW_v4B_accessible_20141014.pdf
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Post by percy on Feb 15, 2015 11:20:41 GMT 1
The 'ISA's are tax avoidance' line is a right wing trope punted out by w****rs like Peter Hitchens whenever the issue is debated. There's only one flaw in this argument - it's b******s. From HMRC's own literature... Avoidance is exploiting the tax rules to gain a tax advantage that Parliament never intended. It often involves contrived, artificial transactions that serve little or no commercial purpose other than to produce a tax advantage. It involves operating within the letter, but not the spirit of the law. It does not include international tax arrangements such as base erosion and profit shifting (BEPS). Measures for tackling this are overseen by the Organisation for Economic Co-operation and Development (OECD). The OECD defines BEPS as tax planning strategies that exploit gaps and mismatches in tax rules to make profits disappear for tax purposes or to shift profits to locations where there is little or no real activity, but the taxes are low resulting in little or no overall corporate tax being paid. Tax avoidance is not the same as legitimate tax planning. Legitimate tax planning involves using tax reliefs for the purpose for which they were intended. For example, claiming tax relief on capital investment, saving in a tax-exempt ISA or saving for retirement by making contributions to a pension scheme are all legitimate forms of tax planning.www.gov.uk/government/uploads/system/uploads/attachment_data/file/364009/4382_Measuring_Tax_Gaps_2014_IW_v4B_accessible_20141014.pdfYou avoid tax by investing in an Isa rather than a normal investment account - it is therefore tax avoidance. you avoid IHT by investing in forestry rather than shares - it is tax avoidance. this is the English language. the HMRC literature quoted above re avoidance is somewhat hypocritical and I would suggest written / approved by someone with a political weasel view rather than the actual tax practitioners at HMRC who do not share that view and know that the "loopholes that are unintentional are not that difficult to close quickly.
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Post by shrewsace on Feb 15, 2015 13:09:10 GMT 1
The 'ISA's are tax avoidance' line is a right wing trope punted out by w****rs like Peter Hitchens whenever the issue is debated. There's only one flaw in this argument - it's b******s. From HMRC's own literature... Avoidance is exploiting the tax rules to gain a tax advantage that Parliament never intended. It often involves contrived, artificial transactions that serve little or no commercial purpose other than to produce a tax advantage. It involves operating within the letter, but not the spirit of the law. It does not include international tax arrangements such as base erosion and profit shifting (BEPS). Measures for tackling this are overseen by the Organisation for Economic Co-operation and Development (OECD). The OECD defines BEPS as tax planning strategies that exploit gaps and mismatches in tax rules to make profits disappear for tax purposes or to shift profits to locations where there is little or no real activity, but the taxes are low resulting in little or no overall corporate tax being paid. Tax avoidance is not the same as legitimate tax planning. Legitimate tax planning involves using tax reliefs for the purpose for which they were intended. For example, claiming tax relief on capital investment, saving in a tax-exempt ISA or saving for retirement by making contributions to a pension scheme are all legitimate forms of tax planning.www.gov.uk/government/uploads/system/uploads/attachment_data/file/364009/4382_Measuring_Tax_Gaps_2014_IW_v4B_accessible_20141014.pdfYou avoid tax by investing in an Isa rather than a normal investment account - it is therefore tax avoidance. you avoid IHT by investing in forestry rather than shares - it is tax avoidance. this is the English language. the HMRC literature quoted above re avoidance is somewhat hypocritical and I would suggest written / approved by someone with a political weasel view rather than the actual tax practitioners at HMRC who do not share that view and know that the "loopholes that are unintentional are not that difficult to close quickly. Is it tax avoidance if I decide to make myself a home cooked meal for dinner rather than buying a hot food takeaway? An ISA isn't tax avoidance because it's part of the UK'S intended tax regime . There's no tax due on the very limited amount of money you are permitted to put in an ISA on an annual basis. How can you be avoiding tax where no tax is due? People usually deploy this 'ISAs are tax avoidance' argument in a specious attempt to equate these legitimate savings accounts with the multi-million/billion dodging of corporations.
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Post by percy on Feb 15, 2015 14:13:48 GMT 1
You open an Isa purely to avoid paying tax - it is the only factor differentiating it from other accounts. Eating in is avoiding eating out and you do not eat to pay tax.
Maybe another example - my purchase of a small wood, is that reprehensible tax avoidance or my choosing to invest in preserving the English Countryside ? I did it to avoid tax - and it's perfectly legal and intended by the tax law - should I be nervous that I'll be named and shamed for not paying my fair share ?
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Post by shrewed46 on Feb 15, 2015 16:59:58 GMT 1
You open an Isa purely to avoid paying tax - it is the only factor differentiating it from other accounts. Eating in is avoiding eating out and you do not eat to pay tax. Maybe another example - my purchase of a small wood, is that reprehensible tax avoidance or my choosing to invest in preserving the English Countryside ? I did it to avoid tax - and it's perfectly legal and intended by the tax law - should I be nervous that I'll be named and shamed for not paying my fair share ? I'm sorry Percy but you are wrong many investors pay into ISA's because they are the best rate of return. This year fewer have invested in ISA's because there are better rates of return on the high street. Therefore in many people eyes it has nothing to do with tax.
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Post by percy on Feb 15, 2015 18:07:04 GMT 1
You open an Isa purely to avoid paying tax - it is the only factor differentiating it from other accounts. Eating in is avoiding eating out and you do not eat to pay tax. Maybe another example - my purchase of a small wood, is that reprehensible tax avoidance or my choosing to invest in preserving the English Countryside ? I did it to avoid tax - and it's perfectly legal and intended by the tax law - should I be nervous that I'll be named and shamed for not paying my fair share ? I'm sorry Percy but you are wrong many investors pay into ISA's because they are the best rate of return. This year fewer have invested in ISA's because there are better rates of return on the high street. Therefore in many people eyes it has nothing to do with tax. You state this as a hard fact - interesting as I work for a financial institution that spends quite a lot of time and effort setting rates at the right level and we do it based on the related customer behaviour ie once people invest in an Isa they leave it there becaus of the tax treatment The average duration of an Isa account is in excess of 5 years (in some institutions it is over 10 years, but in all institutions it is greater than 5 years). Is the gross yield better than a five to ten year fixed deposit ? We do sometimes offer them as a loss leader it is true, but only because the investment is capped - again part of the tax regime. To to say that the rates are better on Isa accounts for any reason than the tax treatment of them is to fail to understand the behaviour of the financial institutions setting the rates.
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Post by SeanBroseley on Feb 15, 2015 22:05:03 GMT 1
You open an Isa purely to avoid paying tax - it is the only factor differentiating it from other accounts. Eating in is avoiding eating out and you do not eat to pay tax. Maybe another example - my purchase of a small wood, is that reprehensible tax avoidance or my choosing to invest in preserving the English Countryside ? I did it to avoid tax - and it's perfectly legal and intended by the tax law - should I be nervous that I'll be named and shamed for not paying my fair share ? In fact an ISA is an annual allowance. The next thing is we will be told that using the Income Tax personal allowance is tax avoidance.
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Post by percy on Feb 15, 2015 22:17:15 GMT 1
You open an Isa purely to avoid paying tax - it is the only factor differentiating it from other accounts. Eating in is avoiding eating out and you do not eat to pay tax. Maybe another example - my purchase of a small wood, is that reprehensible tax avoidance or my choosing to invest in preserving the English Countryside ? I did it to avoid tax - and it's perfectly legal and intended by the tax law - should I be nervous that I'll be named and shamed for not paying my fair share ? In fact an ISA is an annual allowance. The next thing is we will be told that using the Income Tax personal allowance is tax avoidance. The tax allowance is a non-elective exemption. I appreciate that people like to play with words to try and score points but tax avoidance is by definition any action taken to specifically avoid paying tax - investing in a tax free savings account to earn tax free income for example. If that action is illegal the it is not avoidance but tax evasion. Tax avoidance is legal is the only point I am making which some seem to think is not morally correct - I'm sorry but I cannot see that it is reprehensible behaviour. In most (if not all) cases the scheme/loophole/whatever you choose to call it is perfectly well known by HMRC and they choose to do nothing about it because it is intended or they are unconcerned by it.
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Post by shrewinjapan on Feb 16, 2015 0:54:07 GMT 1
Percy, do you apply such strictly literal definition to other commonly used phrases in life, or just to "tax avoidance", as it suits your argument? Am I to assume that you arrived at this website on a surf-board? Do you return bottles of chardonnay complaining that the wine isn't white? The phrase tax avoidance has an accepted meaning narrower than simply any action to avoid paying tax. Though you, for some reason, argue otherwise, it seems commonly taken to mean convoluted measures taken to exploit loopholes in the tax code. HMRC may for some reason not take action in every such case, but there are many instances, some well-publicised, where they have. For sure it is a legal grey area - not criminal like tax evasion, but also not legitimate, hence enforcement of penalties and interest charges in such cases. An ISA, a legitimate scheme intended to encourage saving by way of reduced tax liability, is as much tax avoidance as a catch by the keeper is hand ball.
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Post by Deleted on Feb 16, 2015 9:01:01 GMT 1
I'm ****ing myself laughing here.
I just avoided paying tax on the 642 quid I made on my ISA.
That will show 'em.
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Post by shrewsace on Feb 16, 2015 12:05:41 GMT 1
I'm ****ing myself laughing here. I just avoided paying tax on the 642 quid I made on my ISA. That will show 'em. You're as bad as Vodafone - you lefty hypocrite!
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Post by davycrockett on Feb 16, 2015 12:51:05 GMT 1
A simple question for Mr Percy
When you complete your tax return there's a question something like 'Are you involved in any Tax Avoidance schemes,
Do you say yes and list your ISA's?
An ISA is not a tax avoidance scheme (as defined by HMRC) just a legitimate way of avoiding tax which you dont have to pay, which has nothing to do with the practice HSBC has admitted is wrong
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Post by The Shropshire Tenor on Feb 16, 2015 13:25:04 GMT 1
My friend was a senior official at HMRC, one of his tasks there was to head a team that audited the tax returns of city financiers and the like.
Then he got an offer from one of the Big 4 accountacy firms of a job heading a team to advise high earners in the city about how to minimise their tax liabilities, which he accepted.
The job paid around 4 times his HMRC salary, plus car, first class travel etc.
It strikes me that wealthy individuals and institutions are able to pay more for the best advice from the best qualified people than the Government are.
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Post by percy on Feb 16, 2015 14:15:13 GMT 1
A simple question for Mr Percy When you complete your tax return there's a question something like 'Are you involved in any Tax Avoidance schemes, Do you say yes and list your ISA's? An ISA is not a tax avoidance scheme (as defined by HMRC) just a legitimate way of avoiding tax which you dont have to pay, which has nothing to do with the practice HSBC has admitted is wrong No, just as I don't list my forays into forrestry or venture capital - they are not tax avoidance SCHEMES they are simply exploiting the tax rules to avoid tax. the question started with is tax avoidance ok or not - it is ok ! Whether you do it via a scheme or through a normal provision is irrelevant. As you point out - the fact that you disclose participation in the more edgy tax avoidance schemes makes it somewhat apparent that those doing it are not doing something illegal.
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Post by percy on Feb 16, 2015 14:36:39 GMT 1
Percy, do you apply such strictly literal definition to other commonly used phrases in life, or just to "tax avoidance", as it suits your argument? Am I to assume that you arrived at this website on a surf-board? Do you return bottles of chardonnay complaining that the wine isn't white? The phrase tax avoidance has an accepted meaning narrower than simply any action to avoid paying tax. Though you, for some reason, argue otherwise, it seems commonly taken to mean convoluted measures taken to exploit loopholes in the tax code. HMRC may for some reason not take action in every such case, but there are many instances, some well-publicised, where they have. For sure it is a legal grey area - not criminal like tax evasion, but also not legitimate, hence enforcement of penalties and interest charges in such cases. An ISA, a legitimate scheme intended to encourage saving by way of reduced tax liability, is as much tax avoidance as a catch by the keeper is hand ball. The accepted meaning that you reference is for 'tax avoidance schemes' not 'tax avoidance' which is simple English and not an attempt to be technical. If you look at training material for financial planners the most basic part of 'optimising the tax position of the client' lists Isa accounts as "the most basic method to avoid tax on investment income which is applicable to most, if not all, clients." when tax avoidance schemes go wrong ? that is normally because the interpretation of the tax law was incorrect or where HMRC re-write history and go back to clarify what they meant to write in the tax law. As you say, there are grey areas - wrong to suggest that those having to pay late interest charges are doing anything illegal or improper - or even hidden. This is a bit different to the poor persecuted benefit cheats referenced as having the same intent to defraud the nation.
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