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The Inland Revenue have set out a number of indicators of tax planning to be wary of.

The inclusion of one of these features does not necessarily mean that tax avoidance is involved but it could be

• It sounds too good to be true

• Artificial or contrived arrangements are involve

• It seems very complex given what you want to do

• There are guaranteed returns with apparently no risk

• There are secrecy or confidentiality agreements

• Upfront fees are payable or the arrangement is on a no win/no fee basis

• The scheme is said to be vetted by a top lawyer or accountant but no details of their opinion are provided

• The scheme is said to be approved by HMRC (it does not follow that this is true)

• Taxation of income is delayed or tax deductions accelerated

• Tax benefits are disproportionate to the commercial activity

• Offshore companies or trusts are involved for no sound commercial reason

• A tax haven or banking secrecy country is involved without any sound commercial reason

• Tax exempt entities, such as pension funds, are involved inappropriately

• It contains exit arrangements designed to sidestep tax consequences

• It involves money going in a circle back to where it started

• Low risk loans to be paid off by future earnings are involved

• The scheme promoter lends the funding needed

• There is a requirement to take out insurance against the failure of the tax planning to deliver the tax benefits

Haxton Chartered Accountants West London are very well placed to advise you on any schemes you may have or are thinking of entering into.

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