On The Spot Blogs
Are You A #Tax Avoider?
Interesting debates are developing in the media about the level of tax avoidance which is acceptable. On the one hand we're all tax avoiders to some degree, whereas others claim they don't avoid any tax. Here's my definition of the unacceptable end. If you can say YES to ANY of these questions, you might be an 'unacceptable' tax avoider!
1. Did you pay £50,000 or more to an accountant/adviser/bank to set up a scheme or provide funds?
2. Have you set up an additional company or are you carrying out an additional transaction that you wouldn't otherwise have done?
3. Are you really a second-hand car dealer? Or do you have another very full time job such as a Radio 1 DJ?
4. Does a large amount of money move around in a circle and come back to you, minus fees paid to the accountant/adviser/bank?
5. Are you spending a lot of time changing how you run your business or personal life just because you've been told to?
6. Do your advisers talk about Tax Counsel's opinion?
Probably out of these, 2. is the most problematic.
If you're a shareholder and a director in your own company, and you pay yourself dividends out of taxed profits, but could have taken a salary instead, is this included? No. You really are a shareholder. Your company really made profits. And you really decided to take a dividend. Paying a dividend is one of several normal choices available to a shareholder-director.
Different to all of the above is tax evasion which is simply not telling HMRC about income you've earned or pretending you've spent more money. This has and always will be illegal and often confuses the debate!