Tax Strategies and Structures

Now that the last Finance Bill has received Royal Ascent it is noticeable that a number of new tax strategies have been released. The new disguised remuneration legislation brought an end to many strategies that had been around for some while. The longer a tax strategy is around the more likely there is to be copycat solutions. This new legislation is both long and complex and more particularly has been spectacularly poorly drafted. This has meant that it has been difficult to unwind existing structures caught by the new legislation and gain any certainty in the interpretation of that legislation as it impacts on current transactions, both those which are simply undertaken in the normal course of business and those that could be seen as part of a more aggressive tax strategy.  

Our objective is to ensure that clients are fully informed of their tax options so that they can make informed decisions. It is not our role to second guess what our clients want to do. What we can do when looking at any tax planning is to assess both the commercial and tax risks associated with it and to assist the client in understanding whether the tax planning meets their needs. The truth is that some tax planning, from that perceived as low risk through to the more aggressive high risk strategies, is poorly thought through and even more poorly implemented.

That is not to say that there are not some very effective tax solutions available which are not only robust in their structure but also rigorous in their implementation. Even in these circumstances it must be assumed that HMRC will enquire into any tax planning and therefore it is vital that those providing a solution also have the skills, resources and the will to defend their planning. The fact is that it can take many years for an enquiry to be closed. This extended open enquiry period is in part a result of the complexity of the tax legislation and the shortage of resources available to HMRC, and if one were cynical there is little incentive for HMRC to close a case where it is not certain of winning the argument as it creates uncertainly in the minds of the taxpayer and may dissuade them in carrying out any new planning.  Danny Alexander's announcement this week suggests that HMRC will increase its focus in this area backed by greater resource.  

There may be new opportunities out there that fit with your own needs but after reviewing your options the answer may simply be to do nothing. Over the next few days we will provide details of the tax strategies that we are familiar with and which meet our own internal quality and risk assessment.