The Times has reported that 2,000 individuals have attempted to shelter £1.2bn from tax by using an aggressive tax avoidance scheme.
A number of celebrities are named in The Times to be amongst those trying to shelter their wealth from income tax, including the Weakest Link and Watchdog presenter Anne Robinson.
The Times writes that these individuals have been using the Liberty tax strategy.
This aggressive tax avoidance scheme results in investors escaping the payment of UK income tax, instead paying professional fees equivalent to 7p in the pound.
Liberty buys and sell offshore dividends in order to create artificial losses, which the celebrities and others might then offset against their income tax bills.
I should point out that tax avoidance is perfectly legal. It is tax evasion which is illegal and comes with serious penalties.
However, it is likely that HMRC will scrutinise anyone attempting such aggressive tax avoidance. In the current economic climate, we expect to see the tax man meet any aggressive tax avoidance schemes with equivalent levels of aggression.
When it comes to tax planning, keeping things simple makes real sense.
Simple tax planning can still be effective and is unlikely to incur the wrath of HMRC. If any celebrity who has made a career out of expressing assertive views on consumer rights, sticking to simple tax planning strategies that won’t result in negative press headlines is likely to be a good thing to consider.
We suspect that somewhere in the UK today, an Accountant will be hearing that now infamous catchphrase, “You are the Weakest Link, goodbye!”.
Photo credit: Flickr/David Wulff
