Income Tax Mitigation
Income Tax Mitigation comes in many shapes and sizes.
For example, a pension scheme is a type of Income Tax Mitigation scheme, and it is not usually viewed as contentious by HM Revenue and Customs.
Additionally, the Government has introduced income tax reliefs to aid business investment in projects that it thinks worthwhile, such as the British Film industry, eco-industries, and urban regeneration of parts of the country. Individuals may receive an element of tax relief for the cost of the investment or some other such incentive as to make the investment more palatable to the private investor. Again, this is income tax mitigation, but which should not be viewed as contentious.
Contrast this though, with some of the other types of Income Tax schemes that have been attacked by the Revenue over the years, for example, Gilt Strips, Charitable Loss schemes, etc. It is probably fair to say that the Revenue despise this type of artificial tax planning more than any other. As soon as they work out how an Income Tax Mitigation strategy works, they seek to change the legislation so that it is stopped.
The difficulty for a client or even a tax adviser who is not a specialist in tax planning is how to spot the good opportunity from the bad opportunity.
A number of firms have developed Income Tax Mitigation strategies aimed at High Net Worth individuals who would like to reduce their tax liability.
Our view is that most Income Tax Mitigation schemes that we see should be avoided. They are simply too contrived and too artificial to stand up to scrutiny in a court of law.
But that is not to say that this is always the case. From time to time, we come across income tax planning ideas that fit in commercially with a particular clients circumstances, and which, while still contentious in the eyes of HM Revenue and Customs, would be defensible in our view.
If you would like to talk to us about possible Income Tax Mitigation, please call us on 01553 630310. Alternatively, please complete the attached questionnaire, and we will contact you as soon as we can.
