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HMRC probing tax avoidance scheme

By Press Association , Jun 20, 2012
Filed under: Tax

A tax avoidance scheme reportedly used to legally shelter £168 million from the exchequer is being investigated, HM Revenue and Customs has confirmed.

The Jersey-based K2 system allows wealthy individuals to pay around 1% tax using legal methods, according to an investigation by the Times.

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The paper said it worked by transferring salaries from mainland investors into a Jersey-based trust, which gave back the money to investors in the form of loans, which are not subject to income tax.

HMRC said it is looking into the system and could look to challenge it.

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"This scheme (K2) was already under investigation by HMRC. If, as is alleged, it depends on the use of loans, it will not work. HMRC are looking into this," a spokesman said.

"If the scheme does work technically, HMRC will challenge it in every way available to them. Government does not intend anyone, no matter who they are, is going to get away with paying less than they should."

The Times said an undercover reporter posing as a £280,000-a-year IT consultant contacted several tax avoidance specialists.

It said that Roy Lyness, of Peak Performance Accountants, told them he could cut a hypothetical tax bill from £127,000 to £3,500 using legal methods, meaning a tax rate of 1.25%.

The newspaper quoted him as saying: "It's a game of cat and mouse. The Revenue closes one scheme, we find another way round it. It's like a sat-nav. I'm driving to Manchester, get a message saying there's a smash at Stoke, press this button to reroute. That's all we do with tax avoidance. The Revenue puts a block in, we just go round the block."

Mr Lyness also runs Lyness Accountancy Practice, based in Birmingham, according to its website. In a section under "tax avoidance", it says: "It is important to recognise tax evasion is illegal - if you indulge in tax evasion you will go to prison."

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Mortgages
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Whole-of-life policies and savings endowments
Other types of general insurance (i.e. mobile phone insurance, pet insurance)
Motor insurance
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i2amawolf

A huffington article quote . " In January of this year, the former Prime Minister Tony Blair was found to have paid tax of just £315,000 on earnings of £12 million. "

June 21 2012 at 5:54 AM Report abuse Permalink rate up rate down Reply

roksted

£168 MILLION FOR ONE SCHEME,
HOW MANY SCHEMES ARE THERE.

Carlilem hit the nail on the head, tax them at source, make them claim at the end of the year like most self employed.
Give the inland revenue the powers similar to the internal revenue of the USA, The I.R. in the U.S. seems to strike fear into the rich and famous.
I think the American people realise that rich Tax evaders are commiting more than a white collar crime, and their goverment treats it like treason against the people. Hence huge fines, property siezure and jail.
COME ON DAVE,
BE MORE THAN MORALLY SHOCKED,
DO MORE THAN WAVE YOUR FINGER IN THE AIR,
GET IT SORTED.
OR, WILL THE ARROW LAND TO CLOSE TO YOUR RELATIONS AND FRIENDS.
ARE YOU MORALLY SHOCKED BY BRANSON, GREEN, ET,AL.
WILL THESE PEOPLE BE EXCLUDED BECAUSE OF THEIR MORAL BELIEFS.
WILL GREEN, BRANSON, AND FRIENDS BE IN LINE FOR GONGS FROM THE QUEEN, DESPITE USING TAX AVOIDANCE SCHEMES THAT DENY THIS COUNTRY BILLIONS.
IN THE END DAVE YOU WILL BE JUDGED ON ACTIONS AND NOT WORDS.

AT PRESENT THERE ARE NO POSITIVE TICKS IN YOUR MORALS OR ACTIONS COLUMN.

June 21 2012 at 5:05 AM Report abuse Permalink +1 rate up rate down Reply

kevinkcc

To ronnie ince in particular ; if the law says you are to pay 20% tax on your earnings , that is what you are meant to do .Otherwise , the lower paid may as well , if they could afford it , pay 1% through a Jersey /Cayman Islands scheme .No amount of court rulings and HMRC approval make the schemes right .As some of the commentators say vested interests appear to some extent be defending the existence of these schemes because they want a slice of the action themselves , and , just like the USA , politcitians and lawyers change laws , approve of the status quo and in return get juicy jobs .It is a VERY well known phenomenon in the USA .All the safeguards were swept to oneside to pave the way for the sub prime mortgage disaster in the states , which spread to us. The perpetrators mostly got good jobs out of it
We know that morals have gone out of the window , and without broadening the debate too much , can thank Mrs Thatcher for some things , but not for sending us back in the direction of the jungle

June 21 2012 at 4:49 AM Report abuse Permalink rate up rate down Reply

3 replies to kevinkcc's comment

feedersoccer

What about the 800 million that super companies owe like vodaphone? rather than chasing individuals.

June 21 2012 at 4:03 AM Report abuse Permalink +1 rate up rate down Reply

carlilem

Put a tax on transferring money out of the country, stop the problem at source.

June 21 2012 at 3:49 AM Report abuse Permalink +1 rate up rate down Reply

svi70

The government will not stop this as they probably all (or their spouses) use this to dodge tax as most of the cabinet alone are all multi millionaires. They villify people on benefits especially those who are sick and disabled and yet they allow this to carry on. Well yes Cameron we know where your loyalties lie, with the rich and you want to squash us mere mortals into doing as we are told and live on the most basic money you can get away with whilst you and your cronies live the life of luxury. And you promise us another 10 years of austerity, some how i do not think you will get voted in again do you?

June 21 2012 at 2:21 AM Report abuse Permalink +4 rate up rate down Reply

alan381

WHAT ABOUT VODAFONE LET OFF WITH MILLIONS AND THAY STILL OWING £6.5 MILLIONS ARE YOU KNOCKING ON THERE DOOR ???????? NO YOUR NOT

June 20 2012 at 9:02 PM Report abuse Permalink +5 rate up rate down Reply

1 reply to alan381's comment

tonyenglsh

There are strong economic arguments for nil corporation tax. It raises very little tax, is a disincentive for businesses to locate or invest in the UK and provide employment- and thus tax revenues- and its very difficult to collect. Tthat is it fails most of the tests of what an efficient tax should be. Far from Vodaphone coffing up no business should anything. The money they do not pay in tax will not be hoarded - it will get paid out as dividends- ie yours and mine pension pots, invested back in the business which creates jobs etc etc paid to staff in improved wages.
The simple assumption behind your comment whether you have thought about it or not is that government spends all the tax it raises wisely and non wastefully and in the county's interests- all the evidence in recent years points completely in the opposite direction. An ever rising part of taxes is used to keep an ever rising portion of the population in benefits assisted idleness- the government's own stats show this.
The real scandal is the level of taxes we all pay- but as usual the politicians have got us scrapping amongst ourselves- divide and rule eh!

June 21 2012 at 5:16 AM Report abuse Permalink rate up rate down Reply

cfcstevie1888

be very carefull with this scheme look whats happened to rangers,they have been using this tax dodge for 20 years and its completly knackered them,and mark my words every player that played for rangers in the last 20 years will now face a tax demand bigger than what most of us earn in a life time,gazza souness,miller,laudrupp,no one will escape

June 20 2012 at 7:01 PM Report abuse Permalink +3 rate up rate down Reply

phil

HMRC need look no further than the House of Lords and paliament to catch the biggest fiddlers!

June 20 2012 at 5:16 PM Report abuse Permalink +5 rate up rate down Reply

quaytec

"We're all in this together", says PM. Really, Mr Cameron?
The rich get richer, Don't worry HMRC will drag there feet long enough for them all to move on to the next scam, to sit pretty until another news paper exposes them. These reporters must be so intelligent , or is it our tax inspectors are so stupid (or turning a blind eye).

June 20 2012 at 5:07 PM Report abuse Permalink +3 rate up rate down Reply