Tax Avoidance Can Get You Arrested – It’s Time for Some Tax Advice

HMRC Arrests Tax Evaders – Reason Why Tax Advice is Precious

There are several reasons why financial advisers continue to provide tax advice. For starters, by paying the right amount of tax, you stay out of the authorities’ radar. Back in August of this year, five plumbers were taken into custody for not paying the correct amount of tax. Some 600 more were under civil investigation conducted by HM Revenue and Customs (HMRC) for the same charges. Some of the people involved owe as much as £150,000.

The investigations and arrests were conducted as part of HMRC’s campaign called the Plumbers Tax Safe Plan (PTSP). The plan invited heating engineers, gas filters, plumbers, and others working in related fields for the purpose of getting tax affairs sorted by the end of August, although an earlier deadline of May 31 was set. By then, people were already encouraged to confess.

HMRC found out that those under investigation and arrested are tax ghosts-people who don’t declare their income.

HMRC considered the following areas to be raided for tax avoidance:

- Kent

- Yorkshire

- Tyne and Wear

- Cambridgeshire

- South Wales

- Midlands

The whole UK is under the investigative eyes of HMRC. People committing or about to commit tax evasion have been warned.

Let’s Clear Things Up. Tax Advice and More

Tax advisers say that although HMRC’s disciplinary actions were only appropriate, reporting the arrests has a rather deterrent effect. It has become quite apparent that people who plan to come clean are now afraid because of news of the investigations and the arrests. So, instead of encouraging people to come clean, the police and HMRC may be doing the opposite.

Another problem that has come up is the issue of employers who pay their workers cash in hand and refuse to follow tax obligations as employers. If this is the case, the more appropriate procedure is to report the employer because in a case like this it’s the employer who is liable.

Another thing that’s sure is that the plumbers who were apprehended weren’t technically captured due to tax avoidance, but tax evasion. What they did was evade tax payment duties, which is illegal.

This intervention of law enforcement doesn’t only apply to plumbers and gas filters. Whether you’re a florist or medical professional, evading tax obligations is punishable by law, so take proper tax advice. Read more

2011
10/16
CATEGORY
Taxes
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Have You Done Your Inheritance Planning Review to Avoid Chargeable Lifetime Transfer?

As Benjamin Franklin said, ‘the only things that are certain in life are death and taxes’, a statement which has stood the test of time and Inheritance Tax touches on both of these issues. When you pass away, an assessment is made as to the value of your estate, including cash, property businesses and so on. If this exceeds the current nil rate band (set at £325,000 until 2014) then your family will have to pay 40% tax on all other assets.

This tax bill can be reduced through various methods, but you must consider the impact of these options and do an Inheritance Planning Review as there is rarely one solution which suits most people. For example the easiest way to avoid it is to gift your money away and live longer than 7 years so that the gift is completely outside your taxable estate. However there are obviously issues here regarding whether you would like access to this money again, whether it is wise to give your beneficiaries large amounts of money when they are young and so on.

If you are confident that you have enough income and capital to be able to afford to give money away in order to reduce an inheritance tax bill, then there needs to be serious consideration given to which type of trust structure to use. For example you may wish to gift all the money but still receive an income from the investment, or you may want to retain access to the capital should you need it but place all the future growth outside your estate immediately (therefore avoiding having to wait 7 years on this part of the money). You may not want an income but would like the option to start an income in the future or you may like to receive an immediate ‘discount’ in the inheritance tax you’d pay if you were to die within 7 years of setting up the trust. Therefore with so many options available it is worth considering your situation, your future objectives and the potential impact of any trust you put in place. Read more

2011
10/16
CATEGORY
Taxes
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