Let’s not lose our morals when it comes to tax planning is the message from John Rouse, partner at Midlands law firm Wright Hassall.
This follows the ongoing news stories of celebrities and high net worth individuals using offshore schemes for tax avoidance purposes.
According to Rouse, current news has certainly highlighted a division between what people consider to be morally acceptable and what the law states is legally correct when it comes to tax planning and the lengths some individuals, not just those in the public eye, will go to in order to pay less tax.
He highlighted the example of the furore created by the Prime Minister’s comments on Jimmy Carr as just one member of the celebrity elite, who took advantage of a legal loophole in order to sign up to an Isle of Man-based tax avoidance scheme.
This led to widespread condemnation of the comedian, his retraction from the scheme and has really thrust tax matters into the public psyche.
Rouse, who works at Leamington-based Wright Hassall, said there are a number of sensible, and more importantly, non-controversial planning options available for individuals looking to pay their fair share of taxes but not over the odds.
“Whether a tax scheme is appropriate for an individual or business will depend on their attitude to taxation, their desire to lessen their tax liability and the risk they are prepared to accept to lessen that liability,” he said.
“Many people pay more tax than necessary purely as a result of not structuring their affairs in a prudent manner and using the tax allowance and exemptions which HMRC fully expect them to utilise.
“A number of these planning ideas, such as annual gift allowances and looking at the correct ownership structure of assets, including property, are merely a case of organising your affairs to be tax efficient and using tax allowances given by HMRC.
“HMRC issue guidance confirming which planning ideas are approved and how certain exemptions can be utilised with HMRC approval. Individuals should take these guidelines into account and also seek the correct professional advice when considering their tax futures. Individuals and companies can substantially reduce their tax liabilities with sensible planning without the need to enter into complex tax saving schemes.”