1. Employee benefits trust.
1.1. Also known as an EBS.
1.2. The employer is paid a basic salary with the remainder of the pay coming to you as a loan.
1.2.1. Loans are not liable to be taxed.
1.3. John Caudwell (Phones 4 U) founder, uses this trust. the Caudwell Group.
1.3.1. due to this trust, the company paid 20 million £ into the trust with 11 million £ being solely for John's benefit.
1.3.1.1. If the 11 million had been paid directly to john rather than through the trust as a long term low interest loan, john would have had to pay a huge income tax bill.
2. HM Revenue
2.1. HM Revenue has set up a specialised unit to fight against tax avoidance.
2.1.1. Put a stop to the payment in kind scheme
2.1.2. They took the employee benefit trusts to court, HM Revenue got a partial victory.
2.1.3. They will be investigating those who do not diclose, when they have to disclose,
2.1.4. They force accountants to warn them of when they performed their tax avoidance tricks.
2.1.5. Declared war on loss creation schemes.
3. Partnership loan.
3.1. Was originally developed to help the growth and development of the partnerships and to build business
3.1.1. not deigned to purchases property or other assets like yachts on the cheap. (this is how it is currently being used.)
3.2. Deloitte claim that partnership loans are commonplace,
3.3. Offers a 40% tax relief on mortgage interest.
4. Monaco
4.1. Philip Green
4.1.1. owner of Top Shop, Top Man, Burton, Wallis, BHS and Dorothy Perkins
4.1.2. Lives in Monaco with wife Tina.
4.1.2.1. The shares are in Tina's name meaning due to her residency in Monaco they do not haver to pay income tax.
4.1.2.1.1. If they were to pay tax in the UK, they would have had to pay 285 million on the dividend. (this is based on a higher rate tax payer receiving a dividend, they pay about 25% of the dividend they get)
4.1.3. Runs his business back in Britain.
4.2. No income tax for the wealthy.
4.3. If a 'normal' person moved to Monaco, would they be tax exempt?
4.3.1. No! They would need to apply for residency, if this approved they would need a couple hundred thousand in a Monaco bank.
5. Payment in kind.
5.1. Employers used to pay employee bonuses in gold -until HM Revenue intervened in the early 90s.
5.1.1. not long after there was a new loophole, in the cellars of London Café Royal, where fine wine replaced gold.
5.1.2. instead of getting cash bonuses, cases of fine wine were used as payment, these could be traded and converted into cash.
5.1.2.1. when wine was hard to get hold off, people came up with alternatives, such as...
5.1.2.1.1. Valuable carpets.
5.1.2.1.2. Animal Skins.
5.1.2.1.3. Antiques.
5.1.2.1.4. Bales of hay.
5.1.2.1.5. Anything that can sell immediately for cash.
5.2. This scheme wiped out National Insurance.(income tax payable as normal.
6. Loss creation schemes.
6.1. Creates an artificial loss (gives the ability to tell the tax many that you don't owe anything)
6.1.1. Due to the loss being 'artificial', no actual money is lost.
6.2. creates a no tax liability
6.3. HM Revenue estimate this scheme costs the country over two and a half billion £ a year.
6.4. Known as the ultimate tax terminator.
7. Other notes.
7.1. Inland Renevenue estimates that tax avoidance in the UK has cost the cost the government aound 10 billion in a single year in dissapearing tax.
7.2. Its a story of intervention and prevention for HM Revenue
7.3. Paul Beckinsdale Walker - a tax cutting lawyer views tax as a cancer, a cancer that will kill your business. making him a doctor of sorts in his eyes.
7.3.1. He doesn't see himself as a cheater, he thinks he has a better strategy.