STRATEGIC TAX PLANNING PARTNERSHIP
International & UK Tax Consultants
17 December 2009
PRESS RELEASE
Abusive Charity Tax Scheme Blocked
On Tuesday, just as many were preparing to wind-down for the Christmas break: Stephen Timms, Financial Secretary to the Treasury blocked a tax scheme designed to secure income tax relief from a gift of shares to a Charity that was being heavily marketed to City workers. The use of Charities in tax schemes is not new and several previous schemes have been blocked or are the subject of investigations, some criminal.
The scheme was basically a circular one, where say £1m of quoted shares were sold from an Offshore Company to a Taxpayer for £100k; then gifted to a UK Charity and then given back to the Offshore Company, by the Charity. The key was an option (that the shares were subject to,) and in valuing the gift, was to be ignored, as the tax legislation does not cover such \"contingent liabilities\".
Daniel Feingold, Senior Partner of Strategic Tax Planning Partnership comments:
\"This scheme is merely the latest in a line of schemes exploiting Charitable relief on share gifts. Two Directors of Accounting firm, Vantis Plc are now facing a criminal trial at the Old Bailey in January for involvement in a similar scheme. The \"purposive approach\" adopted by the House of Lords in the IRC Commissioners -v- Scottish Provident Institution (2004) case, would have rendered this scheme ineffective anyway. The fact that such a scheme was still being marketed, demonstrates that there are still many Advisers who do not understand the boundaries of acceptable tax planning. It also shows that legitimate tax planning, NOT artificial schemes, are the best way to plan for the 50% income tax\". This is perhaps the best message to take into the New Year, as April 2010 approaches!
