Warning to Landlords (and others)

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Warning to Landlords (and others)

The Government has made it very clear that tax evasion (not paying due taxes) is illegal and will be prosecuted. Whilst we may all have an opinion about the fairness of the law, failing to pay taxes invariably carries with it the real prospect of prison.

Richard Fuller found this to the cost of his liberty. As a landlord with various properties he failed to properly declare and pay the capital gains tax that was due on those he sold between 2006 and 2013. As a result, he evaded £157,725 of capital gains tax. As of last Friday, he has now begun a 27-month prison sentence and of course assets are being taken to pay the correct tax.

Hidden costs but not hidden taxes

Whilst there will always be people that do well from property investments, the reality is that property is not very liquid. There are also many forgotten or hidden costs – such as purchase and sale costs, insurance, lost rent, improvements, accountancy costs and of course tax on the gains.

It is never worth evading tax. It is illegal and anyone doing so will still find plenty of room at her Majesty’s prison service, despite reports of overcrowding. Mr Fuller was found guilty of cheating the public revenue and fraud by false representation by a jury at Winchester Crown Court.

What the Taxman said..

Richard Wilkinson, Assistant Director, Fraud Investigation Service, HMRC, said:

“Fuller thought he was above the law and decided not to declare or pay the tax due from the sale of some of his property portfolio. It is simply not acceptable to steal from UK taxpayers.

“HMRC will continue to pursue those who attempt to hide their gains on assets, their income, and investigate those who attack the tax system. We ask anyone with information about suspected tax fraud to contact our Fraud Hotline on 0800 788 887.”

Evasion is not Avoidance

In short, don’t mess with HMRC. It is never worth it. Tax evasion is illegal, tax avoidance (which is using legitimate arrangements within the tax laws – such as ISAs, pensions etc) is something that the Government encourage to help reduce reliance upon the State and invest in the UK economy.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email [email protected]

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Warning to Landlords (and others)Dominic2025-01-21T16:34:24+00:00

Panama Papers

I imagine that you will have picked up on the current big story – the Panama Papers. I imagine that this will rumble on for some time. There are lots of issues to discuss, the ability for the very wealthy to hide their wealth, those that facilitate this to happen, laws about secrecy, laws about laws, political corruption, money laundering, what is ethical, the difference between tax avoidance and tax evasion… not to mention data security.

I don’t know if my thoughts will add much to the discussion, suffice to say that “the system” (by which I mean global tax system) is so complicated that it is little wonder that it is exploited, or some may say “used to advantage”.

It is a sad state of affairs when the wealthy believe that they require such secrecy and the better questions will ask why it is really required. As for the tax system – nobody really likes paying tax, but of course if we want any sort of welfare state or viable social system, we need to combine resources collectively. I don’t know if the debate can be reduced to a matter of “vast wasted taxes spent by bureaucrats” or perhaps “we pay too much tax”.

The other Black List

Fairness is very difficult to define. The vast majority of people in the UK pay very little in direct taxes. The reality is that we are all, quite obviously, interconnected. Billionaires paying less tax than their staff simply does not seem fair in any form. I’m reminded of a line from “The Black List” in which the main character, Raymond Reddington, says “if I paid any tax I’d be furious at how it is wasted” or words to that effect.

Tax is one of those deeply divisive issues and of course is enmeshed with political ideology. Part of my job is to help clients minimise tax payments and use tax allowances properly. So I’m acutely aware that I’m part of the problem… essentially taking tax receipts off the table, so that more needs to be found. Nobody likes to see public money wasted, which merely compounds feelings of frustration. The Panama papers imply that those in charge of deciding how public finances are spent, don’t like the way they do it for their own nations.

Daring to think simply?

Does life have to be so complicated? If there was one rate of tax, would there be any need to hide money? (currently taxed at very different rates). If the very rich could declare their wealth properly, would more tax be collected? Is anyone immune from financial corruption as the numbers get larger and larger? Does the reality that the Offshore market exists confirm the suggestion that the very rich would leave, if tax rates are increased? Or have they effectively already left? Is it possible to have fair taxes when certain countries exist purely to defy such reasoning (Monaco). Certainly rather more is to be revealed by the #PanamaPapers and one thing that is certain to me…. this is not new news.

Dominic Thomas
Solomons IFA

Panama PapersDominic2025-01-21T16:34:25+00:00

The Budget 2015 – A New Mad Max

So, the Budget is already ancient history, the political hoo-hah has been left to fester, tweak and develop into an election manifesto campaign. So what, if anything grabbed my attention?

Jilted Bribe

Firstly, I have to admit that I was expecting there to be a little more of an electoral bribe. Whilst the Chancellor certainly made much of the fact that he wasn’t going to (and thus seek to be understood as prudent or sensible) the truth is that, well… he didn’t really offer a bribe (unless its one I missed). Frankly with the national purse in the shape its in, I was rather glad, (though I remain open to the possibility of solving the problems differently).

ISA with tax relief? – future implied?

That said, the first time buyer ISA does sound like a good idea. The detail needs further examination, but in essence there is 20% tax relief on the annual ISA allowance for people that are 18 or over and don’t (and have never) own a home. £3,000 of the £15,000 ISA allowance will be paid by the Government. Whilst everyone that qualifies will benefit, in practice, this will be a very good way of saving if you qualify… if not you, perhaps your children… opening up further options for more wealthy parents.

Pensions and Politicians… taking the …point?

As for pensions, I have to admit that the utter folly of politicians in relation to pensions has shifted gear over the last 10 years. Whilst knowing that we all need to save more so that there is less reliance on the State system… perhaps even the prospect of a means-tested State pension (who knows?) they are determined to punish successful investing and saving.

Here in the UK we are now restricted on how much can be paid into a pension and how much the pension fund can be worth. Utter madness. Yes £1m is a lot of money, but are we also going to cap how much can be held in a bank account or the value of property? what about the value of a business? These are measures to appear a poorly informed crowd by a poorly informed media. I would immediately abolish the Lifetime Allowance and simply restrict how much tax relief is provided on payments to pensions. It doesn’t have to be more complex than that. However we have a new maximum pot size for your pension. To say that this complicates life further for anyone in a Defined Benefit (DB) pension such as the NHS, would be a masterful understatement. Just so that we are clear… the Lifetime Allowance has reduced from £1.8m to £1.25m already and the Budget has reduced this to £1m in 12 months time. Ok, there will be some form of protection, but if recent experience is to go by, this is about as useful as pushing someone out of an aeroplane with an umbrella instead of a parachute. As for those that put a commercial property in their pension pot… good luck with that! The Annual allowance is now £40,000 a year as the maximum value of contributions to pensions, which may as well be written in algebra when attempting to calculate this for DB members.

Final note: our free APP is updated with all the changes announced for personal allowances, savings rates and so on.

Dominic Thomas

The Budget 2015 – A New Mad MaxDominic2025-01-27T17:04:13+00:00

Planning for the Tax Year End?

The tax year end is rapidly approaching and you don’t have long to use up various allowances that expire on 5th April 2015, so it really is time to take action now should you wish to do so. Despite the media and politicians doing their best to confuse everyone about tax, tax avoidance is actually perfectly legal and something that is encouraged. By way of example….

NS&I Premium Bonds & Children’s Bonds
ISAs – Annual Allowance
Pensions – Annual Allowance, Lifetime Allowance, Carry Forward Allowance
Capital Gains Tax Allowance
Personal Allowance
Nil Rate Band Allowance (inheritance tax planning)
Giving Allowance (£3,000 per person)
Enterprise Investment Schemes, Venture Capital Trusts, Small Enterprise Investment Schemes
Business Property Relief

There are lots of ways to reduce tax, married couples have even more options. Tax evasion is illegal not tax avoidance. It is certainly true that some schemes are deliberately aimed to test the law on this, but nothing that any of our clients use or would even want to use. Hopefully by now you will have received the lates copy of Talking Money, let me know if you haven’t – we have run out of stock, but you can see an online copy here.

Dominic Thomas

Planning for the Tax Year End?Dominic2025-01-27T16:13:36+00:00

Money and Power

Perhaps my age is showing, but it is only day 6 of the new year and I am already fed up with the election campaign. I ought to be celebrating our democracy and the opportunity to hear reasoned arguments, however inevitably we seem stuck in a cycle of who will tax or cut most, the prospect of genuine change and improvement for all seems rather unlikely with the inevitable tension around money and power.

In a more reflective moment, I remind myself that this is not a dictatorship and we at least get to vote and I don’t really think we are at the mercy of a despot who has anger issues and a twitching finger poised over an end-all button. This isn’t the case for millions of “voters” around the world who are marched off to vote for egomaniacs. This in mind, a relatively new musical to arrive via New York at the National Theatre “Here Lies Love” is based on a 2010 concept album of the same name, which gives musicals a nightclub injection. If you think that a nightclub is exclusively for the “young” perhaps think agains as, the creators Fatboy Slim (Norman Cook) is 51 and David Byrne is 62. The production has the flavour of community theatre, with the execution of high-end night club. A moving stage and audience, all combine to great effect and an entertaining, immersive experience.

Imelda Marcos

This is the story of Imelda Marcos, her rise and fall from power. Byrne and Cook wanted to explore what makes powerful people behave the way they do. I’m not so sure that this was explored terribly well, whilst displaying a delusional, drugged up Imelda, she isn’t portrayed that badly – a little bit too vanilla in Manilla – little about her excessive flamboyancy and penchant for hundreds of shoes. The story is chronological, revealing the fragility of her marriage, her inability to cope with her rags to riches story and a familar narcissism of Heads of State that seem to believe that they “give their all to their people”.

The Price of Democracy

There was little in the musical that gave me reason to believe such behaviour was understood or how to spot it in others and take precautionary action…so no tips for our elections. The world seems to have done little during the period of martial law and assassination of the opposition including the shooting of Benigno Aquino on the steps of his ill-advised return flight to Manilla on 21 August 1983 (age 50) which you may remember. In the Philippines, the Marcos regime was eventually cast out by a peaceful protest, following a corrupt election (February 1986) against Aquino’s widow following which the public simply decided enough was enough. Marcos and his family took US advice and support then fled to Hawaii along with 24 suitcases of gold bullion and jewellery. Sadly for Imelda this took precedent over her 2,700 pairs of shoes. It is estimated that Marcos stole over $10billion from the country, much was invested into various family related businesses and Swiss accounts. The Swiss have so far returned about $684 million. So for me, this musical, whilst being entertaining does little to understand how and why power corrupts so absolutely. Indeed one might argue that the catchy tunes, flashing lights distract from the real story… but then, perhaps that’s the point.

Dominic Thomas

Money and PowerDominic2023-12-01T12:39:50+00:00