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Avoidance, Evasion or Mitigation

In 1936 Lord Tomlin encapsulated the then traditional attitude to tax avoidance when he stated in his summing up in the case of the Inland Revenue versus the Duke of Westminster:

“Every man is entitled if he can to arrange his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure that result, then, however unappreciative, the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax”.

How times have changed!

Of course lawful tax avoidance becomes unlawful tax evasion when false statements are made whether by omission or by positive act.

Governments around the world and particularly the UK and in Spain are making untold efforts to stamp out what they see as a specific problem with tax evasion and aggressive tax avoidance. UK has demanded that its offshore territories sign up to agreements enforcing disclosure of the details of beneficial owners of thousands of offshore accounts and Spain introduced the infamous Modelo 720 at the end of 2012 in an attempt to ensure that all residents fully disclosed their offshore assets. How fantastic for the authorities to be able to compile a database of offshore assets and then compare this with information supplied on individual income tax and wealth tax declarations.

How little sympathy would there be amongst Spanish nationals for expatriates flouting the tax laws by ignoring the requirements for becoming tax resident or for not disclosing assets held in offshore jurisdictions? How likely is it that HMRC will find any sympathy with a UK citizen evading taxation by pretending to be resident in another country and paying tax in neither?

We shouldn’t be surprised by all the attention that public and politicians alike are giving to the subject of evasion or aggressive avoidance- individuals and corporate tax avoiders are an easy target, frequently vilified in the media and by the authorities as morally repugnant and enemies of the public good.

And now we have FATCA and the fast approaching automatic disclosure of information which is already driving clients into more transparent and acceptable arrangements. Let’s face it there are plenty of opportunities available through speaking to one of our certified financial planners for proper tried and tested mitigation strategies through schemes approved by tax authorities without the need for structuring assets in expensive trust arrangements or trying to hide funds in offshore companies or secret bank accounts.

Seventy eight years on from Lord Tomlin’s statement we ask that you make a conscious effort to ensure that you do not fall foul of the tax rules in this country or back in the UK whilst there is still time. We cannot change the past but moving forward we can help put you in a better place. Tax authorities have no intention of giving up in their pursuit of undisclosed assets or unpaid taxes.

If you would like to arrange a meeting in confidence with a financial consultant who can give you some practical and straightforward financial advice please call 900 102 374 or email