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Tax is Rarely Fun(ny)!

I am not particularly social media savvy…I didn’t even know what a blog was until asked to do this, so please bear with me.

I recently attended the show of a well-known English comedian whilst he was visiting the island.  It was a thoroughly entertaining evening and unsurprisingly, considering the comedian, the topic of tax avoidance featured several times (mostly in the heckles).

This got me thinking…

Fortunately, long gone are the days of suitcases full of cash being used for tax evasion, however not too long ago, there was the debate as to whether something was tax evasion (illegal) or tax avoidance (legal).  Most of the time we knew exactly where we stood but at times the lines could be blurred around the edges, particularly with HMRC’s view of some of the more aggressive planning at the extreme end of the spectrum differing from the view in practice.  Indeed, HMRC have retrospectively changed the rules or re-clarified their view over the last few years on several matters which were previously considered to be relatively certain.

But things have moved on.  When undertaking any tax planning, reference needs to be made to the General Anti-Abuse Rule (‘GAAR’) to consider what could reasonably be regarded as a reasonable course of action; the double reasonableness test.

When implementing any plan whilst following these rules, it needs to be operated correctly as good planning can still fail due to bad implementation.

And even getting all the above correct, there may still be a moral element to consider with any tax planning and whether it would be something the taxpayer would be comfortable with if details were reported, accurately or otherwise, in the national media.  Eight out of ten people might not be…which brings me back to the comedian!

Written by:

Derek McNutt
Tax Manager, Abacus Trust Company Limited