Background to tax avoidance

It is important to recognise Tax evasion is illegal - if you indulge in Tax Evasion you will go to prison.

We need to be clear that the strategies we employ are tax avoidance strategies, and tax avoidance is not illegal.

As the name would suggest Tax Avoidance is like using your Satellite Navigation system to avoid a traffic jam on the motorway - it is all about understanding Tax Legislation and interpreting Tax Legislation to your best advantage. In a nutshell it is simply organising your affairs in accordance with the legislation at that point in time.

That's not to say tax avoidance isn't sometheing the government want to prevent, of course they do!

In 2004 HMRC introduced the Disclosure of tax avoidance schemes (DOTAS) legislation which in essence requires the promoter of a tax avoidance scheme to register the scheme with HMRC within 7 days of it being made available for implementation by the client. 

DOTAS has effectively provided HMRC with an early warning system.  It is designed to provide immediate notification to them of tax avoidance schemes so that they can decide whether to take steps to block them through legislation changes which would then make them ineffective. 

When a strategy is registered HMRC issue a registration number to the provider of the strategy. If a client implements a strategy then this registration number is disclosed on the client’s Tax Return so there is no attempt to hide anything from HMRC. To reiterate, each strategy is fully disclosed on the client’s Tax Return.

We show overleaf the exact text of an explanatory memorandum which is freely available describing the Tax Avoidance regulations.

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