X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Tax

    Tax Avoidance

    I’ve only recently been active on this forum and one thing has surprised me greatly. The term ‘tax avoidance’ is bandied about all over the place as if it’s a bad thing. No it isn’t! We should all be doing our utmost to avoid paying tax.

    What we should not be engaging in is tax evasion. Avoidance and evasion are 2 completely different things. Avoidance is legal and evasion is illegal. 

    HMRC use every trick in the book to get us to pay unnecessary tax. They have successfully brainwashed the population into thinking avoidance is wrong. It’s time we all realised this is not the case.

    So could I make a request that in future we get the term right and not use the word avoidance when evasion is what is meant.
    5
    0

    Agreed, the companies that avoid tax are usually within the law, it is not their fault the governments are stupid. When this story comes up there is the usual torrent of 'they shouldism'. I  would ask them what measures they take to pay more tax than required. ISAs are a form of tax avoidance as are many allowances.

    Cut corporation tax and up VAT which is a farce in the property business and is a source of massive lost revenue. Just had a quote from some builders who turned up in 2 cars worth much more than the annual exemption, that does not means much but is an indication of their turnover, needless to say no VAT!


    0
    0

    I'm not entirely sure what tax avoidance means, although tax evasion is very clear.

    Being in the lower scale of income, I find understanding tax allowances and tax exemptions very useful, e.g. £6k pa allowance on savings interest, £7.5k pa exemption or allowance for rent a room, £2k pa dividend income allowance, etc. I don't know whether these would be included as tax avoidance measures, but I'm certainly happy to take them.

    0
    0

    Tax avoidance means legally avoiding paying any tax that you don't have to. You'd be surprised at how much extra tax HMRC receive that they aren't entitled to because taxpayers don't know all the legitimate ways to reduce their tax bill. Add into the equation the fact that avoidance is now perceived to be a dirty word and HMRC are laughing all the way to the bank.

    For example how many buy to let landlords do the following:

    You buy a house for £70k and pay 3% stamp duty. In many cases you have left money on the table that HMRC will happily take off you. Instead of paying 3% stamp duty on £70k it would be possible to pay 3% on anything from say £65k to £70k. How I hear you ask? By agreeing to pay a separate fee for the fixtures and fittings that don't attract stamp duty. Say the house is beautifully furnished and you agree £5k for the fixtures and fittings. Thats a saving of £150 on stamp duty (3% of £5k).


    Sorted.


    0
    0

    If you bought the property for £65k instead of £70k you could indeed save £150 on purchase, but you would pay an extra £900/£1400 in CGT on selling, presuming there was a taxable gain.

    From what I understand tax avoidance falls into 3 categories:

    1. Tax exemptions and allowances - quite straightforward
    2. Tax planning and structuring - quite involved and better with professional advice
    3. Tax avoidance schemes - complex and subject to GAAR - professional indemnified advice essential.
    0
    0

    Except -

    “Taxation is not to be treated as a game where taxpayers can indulge in inventive schemes in order to eliminate or reduce their tax liability.”

    https://assets.publishing.service.gov.uk...c_2018.pdf

    https://www.gov.uk/government/publicatio...buse-rules

    0
    0

    No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores.

    2
    0

    The 1929  ruling is still largely true and it is still the case that taxation can be treated as a game to reduce your tax liability, however much HMRC might wish otherwise. GAAR limits what is legal according to what is reasonable rather than the letter of the law, but people are still entitled to try to reduce their tax as far as the law allows. Tax avoidance is still legal.

    0
    0

    Trouble is HMRC act like they are judge and jury and the courts favour them when we get too creative within the law.
    1
    0

    No offence but that is why advisors like yourself play it too safe for my liking.
    1
    0