The Chancellor was good to his word – he promised he wasn’t going to use the Spring Statement as a mini-Budget and sure enough, there wasn’t a single new measure announced relating to tax.
An hour of my life I’m never going to get back you might say. Well, not quite. It was interesting for all of us closet economists and included at least one half-decent joke (the Edinburgh super-computer/backstop reference). It was massively overshadowed by Brexit, as you would expect, and included a totally unveiled indication of the Chancellor’s views on the type of Brexit he would like to see (a soft one, for anyone who didn’t already know!).
What the Spring Statement did do for me was to encourage me to go digging on HMRC’s website to see whether there was anything for me to get excited about. Whilst this allowed me to confirm that there really was not a single tax measure announced, it also meant that I discovered a policy paper released today on Tackling Tax Avoidance.
A fascinating read for anyone who has lived through the sea change in HMRC approach since 2010 and the complete turnaround in how the Courts have ruled on tax avoidance cases heard during that period. From 2010 to date, over 100 measures have been introduced to tackle tax evasion and avoidance, resulting in an additional £200 billion of tax revenue being raised. Quite a success story.
Tax professionals will not have been able to avoid noticing this change, but for anyone outside of the tax profession, this is clear evidence that tackling tax evasion and avoidance is a high priority of this government and was similarly for the previous coalition government.
Dafferns have always steered their clients away from contrived tax avoidance schemes, but equally, have always advocated sensible tax planning to ensure no more than the right amount of tax is paid by our clients. Today’s policy paper helpfully provides a definition of Tax Avoidance (bad) and then goes on to contrast this with a definition of Tax Planning (good). Hence, we have it on good authority that tax planning is to be encouraged.
Put simply, Tax Avoidance involves operating within the letter, but not the spirit, of the law. Tax Planning involves using tax reliefs for the purpose for which they were intended.
The current attitude of HMRC and the Courts means that it is more important than ever to be well advised when it comes to your tax affairs. It is very easy to stray the wrong side of the tax avoidance line, particularly when viewed from HMRC’s perspective. Dafferns are ideally placed to give you the type of tax advice you need and to keep you clear of ‘too good to be true’ tax avoidance schemes.