What to look for in a tax avoidance scheme

[ninjakettle]

If they are telling your friend they don't need to fill it in then that sounds v. dodgy to me!

I think they took the line that they don't offer tax advice. They did provide him with the scheme number however.

Although £100 hardly seems like much of a penalty!

Thanks for digging this out - that's it in black & white really. I'll leave it up to him to decide if £100 is worth being put on "The list". Cheers

[BlasterBates]

One point of law. Tax avoidance has been redefined. Before 1990, it was any legal way of not paying tax. Now since a landmark case (you can look it up) there is a distinction. In the past tax avoidance was about exploiting intended tax breaks. But during the 1980's "clever" tax lawyers started to interpret the law in a different way than was intended. This lead to long legal battles, and lead to a new legal definition of Tax Avoidance

So just to clarify Tax Avoidance is interpreting the law not in the way that it was intended, and will have HMRC down on you like a ton of bricks. Tax Mitigation is using the law as intended, to pay the less tax, so for example deferring income, using a different method of depreciation. In fact in olden days this would have been called Tax Avoidance.

So any Tax Avoidance scheme by definition will have to be tested in the law courts. So don't be surprised by the brown envelope, and in the end it will be down to a judge to decide whether the interpretation was valid.

[DonkeyRhubarb]

So any Tax Avoidance scheme by definition will have to be tested in the law courts. So don't be surprised by the brown envelope, and in the end it will be down to a judge to decide whether the interpretation was valid.

Not quite true but almost. HMRC do not litigate in all cases. In theory, they are only supposed to go to court if there is some prospect of winning, although their track record says otherwise.

This is the thing that would worry me not disclosing the SRN on the tax return. There may only be a £100 penalty for this, but what if HMRC take the scheme to court and win, and you have to repay the tax. It could be construed that by not disclosing the SRN this constituted evasion, and HMRC could try to impose (upto 100%) penalties as well as interest.