Popular Tax Avoidance Myths Exposed
Many of you might have heard about tax avoidance from different sources. But, do you think that all these information are true? Well, before you answer that, here is a blog for you.
This blog is for all those of you who believe such tax avoidance claims.
Involving in an avoidance scheme that doesn’t work is illegal
The tax avoidance scheme may not work and may cost you a lot of money. But, it is definitely not illegal.
Tax avoidance and tax evasion are same
Do you think tax avoidance and tax evasion are same? If you do, then it is time you know the fact. And, the fact is tax avoidance is legal and tax evasion is illegal. Tax avoidance is a legal way for minimising tax without a deliberate deception whereas tax evasion is illegal way for escaping taxes which can even lead to a criminal prosecution.
A scheme with DOTAS number means it is HMRC-approved
The DOTAS was introduced to make investigations easier for HMRC in tax avoidance schemes. Thus, allocating a reference number to a scheme doesn’t tell about its effectiveness but it simply implies that it needs to be disclosed to HMRC.
Any transaction designed only to avoid tax with no other economic purpose is illegal
If this were to be true, then the pension schemes, ISAs, Enterprise Investment Schemes (EIS), and Venture Capital Trusts (VCT) should all be banned. That’s because the purpose of these tax-efficient structures is to encourage individuals to invest in areas where they might not do.
As tax avoidance often involves contrived, artificial transactions to gain a tax advantage, you must use it to your benefit and not turn it into a evasion. If you would like to discuss about tax avoidance schemes, you can contact our tax accountants
at 020 7060 9556 to get expert advice on such matters.