Tax has pushed its way to the front of the global agenda. In the U.S., President Barack Obama’s administration is trying to stop businesses from using takeovers to move overseas in search of lower rates, a technique called inversion. In May, Credit Suisse Group AG (CSGN) agreed to pay $2.6 billion in penalties for helping Americans dodge taxes. The French President Francois Hollande has stepped up the country’s efforts to pursue tax evaders.
Tax avoidance by corporations and individuals costs European economies as much as 1 trillion euros a year. Tax avoidance costs UK economy £69.9 billion a year, it represents nearly 56% of the country’s total healthcare spend.
Year after year, individuals have used legitimate reliefs to pay little or no tax, according to the HMRC. But there have been many instances where individuals have resorted to illegal schemes to avoid paying taxes.
Tax avoidance is not the same as tax planning, which involves applying tax legislation in the way it was intended – for example saving in an ISA (Individual Savings Account) in the UK where you don’t pay tax on the interest.
In the case of individuals, tax avoidance usually takes the following forms:
• shifting income from the person who should really pay tax to someone else;
• moving transactions out of the UK
• changing the nature of transactions, in particular so that income is subject to Capital Gains Tax rather than income tax
• abusing the law on limited companies.
Chancellor George Osborne wants to strengthen existing rules by introducing a General Anti-Abuse Rule (GAAR). This aims to act as blanket legislation to allow the taxman to differentiate between what counts as responsible tax planning and what is abusive tax avoidance.
If you have questions regarding tax planning and want to ensure you use legal route to save effectively, then contact Gladstone Morgan tax-planning specialists at firstname.lastname@example.org
Disclaimer: All content provided on this page are for informational purposes only. Gladstone Morgan Limited makes no representations as to the accuracy or completeness of any information on this page or found by following any link on this page. Gladstone Morgan Limited will not be liable for any errors or omissions in this information nor for the availability of this information. Gladstone Morgan Limited will not be liable for any losses, injuries, or damages from the display or use of this information. This policy is subject to change at any time.
It should be noted the services available from Gladstone Morgan Limited will vary from country to country. Nothing in the comments above should be taken as offering investment advice or making an offer of any kind with regard to financial products or services. It is therefore important to reinforce that all comments above are designed to be general in nature and should not be relied upon for considering investment decisions without talking to licensed advisers in the country you reside or where your assets may located. Gladstone Morgan Ltd is not SFC authorized. Gladstone Morgan Ltd in Hong Kong is licensed with the Hong Kong Confederation of Insurance Brokers.