The latest “tax loophole” story is about a scheme in Jersey which is currently used by Pop stars, Journalists and many more of the rich and famous. The HMRC are struggling to close this loophole and are desperately trying to implement a general anti avoidance rule, but it begs the question as to why it has been allowed to go on for so many years.
The tax saving is simply achieved by creating artificial companies and artificial relationships between these companies; one thing is clear: there is no real business conducted for the benefit of the UK economy. So it strikes me that there is an easy solution: There should simply be no tax saving or rebate if there is no real business motive in the underlying business or in other words if no proper business is being conducted for the benefit of UK Plc.
And the second question is, how does the UK benefit from the special tax status of Jersey etc.? I don’t understand the niceties of the precise legal status, but as it is a UK dependency why has it been allowed to act as a tax haven? Surely there should be no part of the UK where tax avoidance is the main industry! So here we have it – two tax anomalies and two more simple solutions.
As you know AIMS are no ordinary accountants and we like to keep you up to date on the latest Tax changes and VAT rules, so we have created a quarterly update which you can click here to view.