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