Thought that, in the current climate, this may be useful. It is HMR&C new 'spotlights' which is designed to help their 'customers' understand their definition of tax avoidance:
In Spotlights HMRC will:
•Provide some advice on tax planning to be wary of, listing some indicators that HMRC see as suggesting that a scheme may involve tax avoidance and which we are likely to investigate.
•Identify specific schemes which, in HMRC's view, are not likely to deliver the tax savings advertised. Where HMRC see such schemes being used, subject to the particular facts, we will make a challenge and seek to ensure full payment of the right tax with the right due date.
Set out below are a number of indicators of tax planning to be wary of. The inclusion of one of these features does not necessarily mean that tax avoidance is involved, but the more of these features that are present, the more likely it is that HMRC would see the arrangements as tax avoidance and challenge your Self Assessment. If you have doubts about a scheme then you should check with a reputable tax adviser.
Tax planning to be wary of
•It sounds too good to be true.
•Artificial or contrived arrangements are involved.
•It seems very complex given what you want to do.
•There are guaranteed returns with apparently no risk.
•There are secrecy or confidentiality agreements.
•Upfront fees are payable or the arrangement is on a no win/ no fee basis.
•The scheme is said to be vetted by a top lawyer or accountant but no details of their opinion are provided.
•The scheme is said to be approved by HMRC (it does not follow that this is true).
•Taxation of income is delayed or tax deductions accelerated.
•Tax benefits are disproportionate to the commercial activity.
•Offshore companies or trusts are involved for no sound commercial reason.
•A tax haven or banking secrecy country is involved without any sound commercial reason.
•Tax exempt entities, such as pension funds, are involved inappropriately.
•It contains exit arrangements designed to sidestep tax consequences.
•It involves money going in a circle back to where it started.
•Low risk loans to be paid off by future earnings are involved.
•The scheme promoter lends the funding needed.
Particular schemes
The schemes featured in Spotlights are generally those which HMRC consider have the widest implications and about which there is the greatest need to warn potential users. They will often be schemes that have been disclosed to HMRC and have been given a Scheme Reference Number (SRN). Please note that the issue of a SRN does not mean either that HMRC 'approves' the scheme or that HMRC accept that the scheme achieves its intended tax advantage. These articles are limited exceptions to the usual rule that HMRC do not comment on tax avoidance. No further comment will be made. Only a minority of schemes will appear in Spotlights. In particular, HMRC will not include schemes aimed at very specialised areas, with a limited scope or where HMRC estimate not much tax loss is involved. A scheme that has not featured in Spotlights may still be challenged. You may wish to consider it in the light of the advice above on 'tax planning to be wary of' and consult a reputable tax adviser.
http://www.hmrc.gov.uk/avoidance/spotlights.htm
HTH
In Spotlights HMRC will:
•Provide some advice on tax planning to be wary of, listing some indicators that HMRC see as suggesting that a scheme may involve tax avoidance and which we are likely to investigate.
•Identify specific schemes which, in HMRC's view, are not likely to deliver the tax savings advertised. Where HMRC see such schemes being used, subject to the particular facts, we will make a challenge and seek to ensure full payment of the right tax with the right due date.
Set out below are a number of indicators of tax planning to be wary of. The inclusion of one of these features does not necessarily mean that tax avoidance is involved, but the more of these features that are present, the more likely it is that HMRC would see the arrangements as tax avoidance and challenge your Self Assessment. If you have doubts about a scheme then you should check with a reputable tax adviser.
Tax planning to be wary of
•It sounds too good to be true.
•Artificial or contrived arrangements are involved.
•It seems very complex given what you want to do.
•There are guaranteed returns with apparently no risk.
•There are secrecy or confidentiality agreements.
•Upfront fees are payable or the arrangement is on a no win/ no fee basis.
•The scheme is said to be vetted by a top lawyer or accountant but no details of their opinion are provided.
•The scheme is said to be approved by HMRC (it does not follow that this is true).
•Taxation of income is delayed or tax deductions accelerated.
•Tax benefits are disproportionate to the commercial activity.
•Offshore companies or trusts are involved for no sound commercial reason.
•A tax haven or banking secrecy country is involved without any sound commercial reason.
•Tax exempt entities, such as pension funds, are involved inappropriately.
•It contains exit arrangements designed to sidestep tax consequences.
•It involves money going in a circle back to where it started.
•Low risk loans to be paid off by future earnings are involved.
•The scheme promoter lends the funding needed.
Particular schemes
The schemes featured in Spotlights are generally those which HMRC consider have the widest implications and about which there is the greatest need to warn potential users. They will often be schemes that have been disclosed to HMRC and have been given a Scheme Reference Number (SRN). Please note that the issue of a SRN does not mean either that HMRC 'approves' the scheme or that HMRC accept that the scheme achieves its intended tax advantage. These articles are limited exceptions to the usual rule that HMRC do not comment on tax avoidance. No further comment will be made. Only a minority of schemes will appear in Spotlights. In particular, HMRC will not include schemes aimed at very specialised areas, with a limited scope or where HMRC estimate not much tax loss is involved. A scheme that has not featured in Spotlights may still be challenged. You may wish to consider it in the light of the advice above on 'tax planning to be wary of' and consult a reputable tax adviser.
http://www.hmrc.gov.uk/avoidance/spotlights.htm
HTH
Comment