HMRC have the power to “enquire” into any tax return from a company, a partnership, or an individual. They do not have to give a reason for the enquiry.

Here are the four golden rules for dealing with tax enquiries:

• DON’T try to handle it yourself – get advice before you reply to the initial letter from the inspector, and at all costs DON’T ring the inspector up to “have a chat and sort this out.”

• DON’T ignore it and hope it will go away – remember the mitigation of penalties for co-operation and disclosure

• DO be honest and upfront with your Tax Adviser – only then will he be able to help you

• DO talk to your accountant about taking out insurance to cover the fees for a tax investigation – the professional fees can be very expensive

Note – The 2007 Budget announced changes to the penalty regime for tax investigations. These are being implemented for the 2008/09 tax year, and the penalties under the new rules will be significantly higher than under the present regime.

The demise of the so-called Offshore Property Partnerships (able to supposedly generate totally tax–free Income and Gains by using Offshore Trusts in the Isle of Man, Jersey and Guernsey) has left many Property Investors and Developers in a difficult situation.

The HMRC remedy is a law that closes this Tax Scheme down with a 28 Year Retrospectivity!

This ensures this Tax Scheme, that sought to use the Double Tax Arrangements to produce tax-free profits, is no longer viable.

Once an Investor realises that this route in no longer open, there are 2 key issues:

Firstly, how do they deal with profits already realized? Strategic Tax Planning is able to use its vast experience of negotiating with HMRC to bring about the best deal for Clients in such a situation.

Secondly, for Clients who have Property Assets and Developments inside an Offshore Property Partnership, we can devise bespoke Tax Planning to either minimize and defer any profits, or to ensure through Special Planning the conversion of Income profits to Capital Gains, taxed at just 18%!

We can offer each Client the specific advice they need, based on their individual situation. We then ensure the best outcome for those involved in these Tax Schemes rather than waiting many years for a case to go to the House of Lords for a decision!

Contact Daniel Feingold to learn more about International and Offshore Tax strategies.

A little known International Tax Treaty became Law in the UK on November 1st 2008.

The OECD Mutual Administrative Assistance in Tax Matters Treaty (which currently has 19 countries signed up)
enables tax debts to be recovered in any of those Countries on behalf of the UK HMRC just by making a formal request.

This is in addition to the existing EU MARD Treaty which came into effect in the UK in 2002.

Contact Daniel Feingold to learn more about International and Offshore Tax strategies.

Spain has announced that it intends to abolish Spanish Wealth Tax from Jan 1st 2008.

The Wealth Tax was an annual tax based on the value of Spanish Residents Worldwide assets and on a Non-Resident Spanish situated property. The rates ranged from 0.2% to 1.8% in progressive bands.

Confusingly, this abolition is retrospective and requires the Spanish Parliament to approve it before it becomes Law. This could happen as early as this autumn but it may take longer.

This is good news for Spanish Property investors but it has to be balanced with the fact that Spanish Inheritance Tax remains an issue that requires good tax planning.

Spain has a minimal spouse exemption on death (unlike the UK) and Inheritance Tax at up to 34% on gifts to wife and children. For unmarried or same sex couple’s the rates are multiplied by a factor of 2.4 and go up to 81.6%!

For Capital Rich Retirees to Spain the Wealth Tax was a burden that made Spain less attractive.

That penalty has now gone, but again, careful planning is needed to minimise Spanish Income Tax at up to 43% and Capital Gains Tax at 18%! As well of course as the Inheritance Tax.

Contact Daniel Feingold to learn more about International and Offshore Tax strategies.