When did it become a sin not to pay too much tax?
Looking at the newspapers recently - broadsheet, as well as tabloid - you could be forgiven for thinking that any attempt to reduce your tax bill is considered a crime and should be subject to heinous penalties.
I have news for you - IT'S NOT!
A long time ago, way back in 1936, Lord Tomlin stated (IRC v Duke of Westminster) that every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be.
That made perfect sense then - and it still does. You are not obliged to arrange your private or business affairs to maximise the tax take to the Government. That's not to say you shouldn't follow the rules.
Does the law permit a company to set up a subsidiary in a low-tax jurisdiction and generate profits with a lower rate than in the UK? Yes, it does. At worst, you may have to bring the profits back after two years, but if the profits are high enough, that deferment can be worth having. Is it permissible to remortgage a let property and obtain relief for the interest against the rents - whatever you spend the money on? Yes it can be. Is it legal to rearrange shareholdings so within a couple both may obtain the £80,000 benefit of entrepreneurs relief? Of course it is! I could go on, but you probably get the picture.
It is commercially sensible not to pay more tax than you are legally obliged to do so and I for one do not feel guilty about planning to ensure this is the case. When I want to help out a needy cause, I choose to give my spare cash to charity, not the Chancellor - and I make sure I claim gift aid relief when I do!
Date: 30th March, 2009
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