Way OT: Family Investment Companies

[Inoffthered]

That is unless you do something about it. Everyone has the opportunity to take action to save tax. Even though tax rules may change in the future and may stop future investments, retrospective changes are most unlikely, so early action could save a great deal.

I recently attended a seminar where some HMRC big wig was speaking. She explained what HMRC was doing to hit tax evaders (no problem with that) before going on to say HMRC didn't like avoidance either. She said that HMRC "would start to interpret legislation on the basis of what they BELIEVED to Parliament's intention not necessarily what was written in the legislation".

I suggested that if the drafting of tax legislation was poor then surely the solution was to draft it better. She did not agree and complained that too many people were looking at ways of reducing their tax bills and that it was HMRC's job to stop them.

On the question of avoidance I asked for clarification and whether in HMRC's view employment through a limited company and taking remuneration partly as dividends instead of operating as a sole trader was considered to be avoidance. She refused to answer.

HMRC is strong on the weak but weak on the strong. They don't like workers arranging their affairs to minimise tax, but they schmooze with big organisations who get away with murder. (Google Vodaphone and the career change made by the head of HMRC who left his post to join Vodaphones tax advisors shortly after agreeing the softest of tax deals a company could have wished for.

The tax treatment of Amazon is also an affront to regular tax payers who would never be allowed to get away with the sheltering of profits in Luxembourg and pay peanuts in the UK because the the Amazon operation here is merely a distribution operation, the profits on items sold are realised in Luxembourg. Somehow, HMRC dont consider this avoidance to be worthy of review.

As for HMRC not making retrospective changes, I do not share your confidence, ask anyone who has been involved with an employee benefit trust.

 

[Alexam]

Agreed, too many people and companies are trying to 'bend' the rules to fit their schemes and they may well find that those schemes will not be allowed, particularly employment benefit schemes, which are 'tax dodges' and not, in my opinion, worth the paper they are written on.

Trust schemes, as in IHT mitigation have been around for a very long time and most of the wealthy families in this country can pass on their wealth with properly set up Trusts that can continue up to 80 years, so if required, the children and their children can continue with the Trust which does not form part of their estate. Then there is the most important point of what to hold in the Trusts, as there are tax implications for many 'assets' in Trust.

The trouble is that many financial advisers, who 'say' they can advise on such things are woefully under trained and have to keep going back to others for advice themselves.

Even those in the legal profession, such as solicitors, talk about these schemes and suggested that they can 'be arranged', but do not know enough about how they work.

It's a minefield to be very wary about, but this is perhaps not the place to discuss this further.

Malcolm