New ‘GAAR’ may put an end to contractor tax avoidance schemes
The ‘General Anti Abuse Rule’ (GAAR) becomes law on 17th July, as part of the Finance Bill 2013 which is due to receive Royal Assent.
These controversial new rules mean that any ‘abusive tax arrangements’ which do not pass the ‘double reasonableness test’ (i.e. which can’t demonstrate that they were put in place simply to abuse the current tax laws) could be outlawed.
Tax advisers across the country will be waiting to see the GAAR guidance to what is, and what isn’t, considered ‘acceptable’ in terms of tax planning.
Contractors who may be tempted by offshore / non-PAYE umbrella schemes should certainly take notice, and seek independent advice before signing up to anything which promises returns which appear to be too good to be true!
You can read some interesting advice from the CIOT here.
31st July deadline for self assessment payments on account
Contractors have until the end of the month to pay the second payment on account for income tax due from the 2011/12 tax year.
Each year, taxpayers have to settle the income tax liability from the previous tax year, and make the same payment again, in two instalments, on the presumption that earnings will remain the same in the following tax year.
If your contract income was lower in 2012/13 than in 2011/12, you can apply to reduce the amount of your payment on account, but should do so online by 30th July, according to accountants Kingston Smith.
However, Andrew Shaw, a tax partner at the firm, warned that “individuals should not be tempted to reduce their payments by any more than is justified, as this will give rise to an interest charge when their final tax bill for 2012/13 is calculated.”