Personal Finance: Tax schemes: sort kosher from treif
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Appearances can be deceptive, wouldn’t you agree?
On the one hand, the taxman is not always as bad as some might think. Recently, HM Revenue & Customs (HMRC) has been issuing warnings about email scams. It seems that some bad guys have been sending emails that purport to come from HMRC and which tell you about tax rebates.
The real purpose of the emails is to gain access to your credit card or bank details. So delete any such email you receive and do not click the links or complete the forms. HMRC say they would never inform us about tax rebates by email.
The email fraudsters use genuine looking email addresses and it all looks kosher — but it is not. They are simply playing on our desire to get one over on the taxman. A tax refund we were not expecting. Too good to be true? Sadly — the answer is yes.
I often encounter this type of situation in another guise. That is the seemingly plausible professional who is promoting a tax scheme, a plan or a structure which he says will enable you to wipe out or reduce your liability to tax.
Some of these promoters have a detailed knowledge of all the relevant tax laws; some just have a broad idea and sound convincing; and some know very little beyond the headlines that they probably heard second or third hand. Invariably, such schemes are too good to be true.
You should always find out about the risks and get the real facts before you can make an informed decision to proceed.
Let me simply share three key facts about tax schemes:
● They all have to be ‘registered’ with HMRC – this does not mean they have been ‘approved’.
● HMRC do not like ‘artificial’ schemes, so you can be sure of being investigated — this can be a very worrying experience and often lasts for years.
● Pay no attention to anyone who claims that their schemes have not been queried by the taxman. There is a long time lag. Taxpayers who ‘did’ a tax scheme in 2007 are still at risk until at least 2010, even if they have received their tax refunds.
There are plenty of ways to legitimately shelter your tax bills from the taxman and to keep your taxes to a minimum without creating problems and worries for yourself. Do make sure though that you take tax advice from a specialist and not from a spiv.
Mark Lee is chairman of the Tax Advice Network. www.TaxAdviceNetwork.co.uk