Tax seems to be in the news for all the wrong reasons recently – the latest headlines highlighted the alleged tax avoidance by premier league footballers.

Increasingly, many small and medium sized business and their owners who face increasing tax bills (especially since the introduction of the 50% rate) are being tempted by tax avoidance schemes.

Aggressive tax schemes designed to exploit loopholes bring into question the ethicalness of tax avoidance. They’re within the law but outside the spirit of the law. They require their details to be disclosed to HMRC under the Disclosure Of Tax Avoidance Schemes (DOTAS) legislation and will almost certainly be challenged by HMRC.

You may have also heard of the term Tax Evasion, this is entirely different, it is illegal. It involves illegally reducing tax bills, for example by understating income or over claiming expenses, which could result not only in civil prosecution, but also significant penalties and interest charges.

Tax planning is not part of tax avoidance and certainly not tax evasion. UK law has developed to allow taxpayers choices regarding how to structure their affairs, this requires an exercise of judgment and is called tax planning.

Tax legislation has more than doubled over the last ten years, but it is daunting that it still remains a taxpayers’ responsibility to ensure that they make correct returns, an increasingly difficult task with the numerous ‘grey areas’. HMRC’s view is not always correct, which has been proven on countless occasions.

At Randall & Payne Tax we do not advise on schemes, none of our tax planning methods are required to be disclosed under DOTAS. We only advise on planning which is within the spirit of the law.

For more help and advice contact Chris on 01453 763471 or email
cjm@randall-payne.co.uk

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