Playing the game?

How many times have we seen in both the mainstream and specialist media reference to the "game" of tax planning?

The never ending game of cat and mouse between those peddling the latest "tax scheme" on one side and HM Revenue & Customs and the UK Treasury seeking to challenge them on the other.  

If we were to believe everything in the media, then the conclusion could easily be drawn that tax planning is a bit like Monopoly really.  It seems to go on for ever and no-one ever seems too certain about who's actually won given the levels of appeal to which such cases can go.  So to continue the analogy, like a game of Monopoly although you know who has technically "won", the question is at what expense?

Well, with the introduction of the UK GAAR (General Anti Abuse Rule) we all expected to see that game brought to a much shorter conclusion, with a lot of scheme providers pulling out of the market place.  At present this doesn't seem to be the case, but as with all "new and shiny" powers that are given to Government bodies I think it will be some time until we see the GAAR used in anger.

However, the purpose of this blog is to point out that one doesn't have to enter this seedy and uncertain world of tax planning, because what I've described above is actually all about tax schemes, not (as the media would have it) tax planning.

To continue the board games analogy, "proper tax planning" is a bit more like that other perennial holiday favourite Scrabble, insofar as its an awful lot more certain where things are going, and leaves you with plenty of input rather than a simple casting of fate's dice.

The idea of planning one's affairs to maximum tax advantage has been around as long as there has been tax , and given that the UK has one of the oldest regimes in the modern world its no surprise that things are a little complex.  However, like that game of Scrabble its a matter of building a solid foundation, with moments of brilliance, before arriving at the ultimate conclusion, i.e. there is no quick fix (well, at least very rarely).  As far as tax planning is concerned it should be like most things in life, if it sounds too good to be true, it most likely is (or soon will be given the authorities attitudes to such aggressive and noncommercial structuring).

Therefore, for a "tax plan" that's going to work you need to take your time and create it steadily using the safest of building blocks, letting the savings accumulate over time. Working within the legislative framework that is our tax system, rather than trying to crack it with a sledgehammer.  It works you know...

Did you get that tax return in on time?

Well, tax filing deadline day has been and gone in the UK, and hopefully you all got your tax returns in to HM Revenue & Customs on time and paid your taxes too, I know my clients did.  If you didn't here's what you need to be aware of...

If you didn't get around to filing your tax return by 31st January this year, unfortunately you'll already have incurred a £100 penalty from HMRC.  You need to make sure you get it sorted out before 1st May, otherwise you'll start incurring further charges at £10 per day up to a total of £900.  If you still haven't done it by 1st August there will be a further £300 added to that, making a total of £1,300!

Well, if you did manage to do your tax return on time, I'm assuming you managed to get it paid too?  If not, you need to get it paid within 30 days from the 31st January, otherwise you will be fined 5% of the tax you owe. There are further 5% penalties arising after 6 months and 12 months too, this is also in addition to interest charges on the tax unpaid.

So, if that return, or payment of tax is still outstanding I'd recommend getting it sorted out in the next few weeks to avoid getting hit by these harsh penalties as well as the tax bill!