FINANCE
Hear it from the experts …
124 Tax avoidance ? Tax evasion ? What to say ? What to think ?
The ongoing controversy about avoidance and evasion continues to create a lot of heat but nothing constructive seems to have come out of the debate .
Since the 1920s the law has stated that we all have the right to order our affairs in a tax efficient way . We have the right to choose ways in which we pay less rather than more tax . Put another way – to avoid paying tax .
The difficulty is to identify when acceptable tax avoidance becomes ‘ abusive and aggressive ’ avoidance and then tax evasion , which is illegal . Evasion is relatively easy to spot as it always involves direct lies or omissions – not declaring income received etc . Avoidance is a much more difficult area because it is legal and there are so many views as to how “ moral ” it is .
There are numerous current examples of government sanctioned ( or suggested ) ways of reducing how much tax we pay – tax free ISAs , tax relief on pensions , VCT investments etc . Possibly thinking that , in these cases , that benefits to the country outweigh the immediate loss of tax .
Quite apart from any questions of morality , the difficulty for the government is that , given the complexity of our tax system , it is remarkably hard to frame clear and robust legislation on what is prohibited .
I suggest the answer is for the government ( and even the Opposition !) to have a proper debate on limits to tax avoidance and create a fast track tribunal to rule on disputes . Also I think it would be beneficial if HMRC were to rethink their policy on prosecutions and publish the results for all to see .
Ian Bell LL . B AMS Accountancy Ltd
The Marriage Allowance
Ask AMS Advice for small businesses AMS Accountancy Ltd . 01793 818400
Most couples cannot benefit from the Marriage Allowance and , the maximum benefit is only £ 220 ( 2016 / 17 ). But – it ’ s simple to calculate and to claim . It is for Married Couples / Civil Partnerships where one is a Basic Rate Taxpayer ( taxable income £ 11,000 - £ 43,000 ) and the total income for the spouse is below £ 11,000 . The one with the lower income can transfer up to £ 1,100 of their unused Personal Allowance to their spouse , potentially saving the higher earning spouse up to £ 220 in income tax ( 20 % x £ 1,100 ). Claim online at HMRC , backdate the claim to the start of the current tax year . HMRC will then either issue a higher tax code to the person receiving the Marriage Allowance , or , if that person is self-employed , the Marriage Allowance will be given via their Self-Assessment tax calculation . Peter Bromiley ACA
www . ask-ams . co . uk @ AMSAccountancy www . ams-accountancy . co . uk
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10 THE BUSINESS EXCHANGE 2016