The recent announcement by the Government that the Treasury is to target a further 10,000 high net worth individuals for tax investigation represents another stage in the seemingly relentless assault on UK taxpayers.
It is estimated that once these measures are in place an astonishing half of all 50 per cent taxpayers could find themselves under investigation. And despite claims that the crackdown will recover up to £7billion a year in unpaid taxes, the truth is that hundreds of innocent businesses and individual taxpayers will have to endure lengthy investigations that will tie up precious resources that should be used to grow their business and help get the economy moving again.
For years a clear distinction has been made between tax avoidance, which is legal, and tax evasion, which is not. Tax avoidance is simply using legitimate means to arrange one’s finances in such a way as to minimise exposure to tax. Tax evasion is using illegal devices to dodge paying taxes that are legally due.
But now the Government is deliberately blurring the distinction by introducing concepts such as ‘unacceptable avoidance’ and creating an atmosphere in which anyone who seeks to avoid paying more tax than they need to is subject to moral censure.
Dubious moral judgements to one side, we will continue to advise clients on their tax planning in whatever ways the law allows. And if you find yourself the subject of an investigation we will of course stand shoulder to shoulder with you in order to reduce much of the stress and disruption these proceedings can cause.
Incidentally, it transpires that the Government is planning to spend £900 million on this new crackdown. Some might take the view that the money would be better spent helping to put HMRC’s house in order!
Save on the company car
In these austere times, businesses are constantly on the lookout for effective ways to cut costs. If you presently purchase your company car(s) and change them on a regular basis, you might find you can save by leasing rather than purchasing.
Small businesses often finance their cars through hire purchase or a loan but leasing charges can sometimes be significantly lower than finance charges. A new website, financeacar.co.uk allows businesses to conduct cost comparisons between leasing and purchasing options and so make more informed decisions in this area.
Bear in mind also that with leased cars used exclusively for business purposes you can reclaim the VAT in full, and even if the car is also used for personal journeys you can normally reclaim 50 percent of the VAT. Check with us if you need advice.
TAX TIP - Reducing CGT exposure
Couples with sizeable assets such as property or shares might consider joint ownership where the asset is likely to result in a capital gain. This way they can take advantage of both personal allowances, currently, £10,100 per person, and realise up to £20,200 of gains before capital gains tax (CGT) becomes payable.