A corporation tax question
Discussion
I have been contacted by a 'tax and trusts' company whos sales literature claims to be able to completely negate corporation tax legally.
It deliberately unclear about how it does this but makes suggestions of setting up trusts to channel profits.
Can this be doen and if so is it legal?
It deliberately unclear about how it does this but makes suggestions of setting up trusts to channel profits.
Can this be doen and if so is it legal?
Eric Mc said:
Probably "legal" but possibly disallowable by the Revenuie if they decide to look into how the scheme works.
There are lots of legal ways of avoiding tax which can be blocked by the Revenue - even if no law has been broken.
Very true. If it's been lodged as a anti tax scheme then it takes time to be blocked. Sometimes a long time if it's not being used too much. The only worry is if it's blocked and made retrospective ... Then you're royally fked !There are lots of legal ways of avoiding tax which can be blocked by the Revenue - even if no law has been broken.
They are more likely to act retrospectively these days - especially now that it is legally required that all new schemes be submitted to the Revenue IN ADVANCE of their implementation in order to gain approval for the scheme.
If the scheme HAS been approved, then there should be no problems. If it hasn't, be very careful.
If the scheme HAS been approved, then there should be no problems. If it hasn't, be very careful.
Exigeowner said:
A little off topic but somebody may be able to answer me, I remember hearing business men in the past saying that their accountant have advised them to spend XXX amount of cash on a car or just anything to avoid some tax at year end, why would that be ( if I have made any sense )
A company pays tax on profits and any expenditure would make the company be less profitable therefore pay less tax (a car wouldn't however because that would be an asset and hence profit would still be the same).It isparticularly worthwhile if profits are going to exceed 300k as the tax increases to 30% beyond that so if you do have upcoming expenditure it's worth bringing it forward to reduce the tax bill.
The best way to reduce it, though, is to simply put it into your pension as that is tax free and reduces your profit accordingly.
Expenditure on assets (such as plant and machinery or cars) CAN result in a lowering of the Corporation tax bill. Capital Assets are usually eligible for Capital Allowances. Capital Allowance are offset against the business profits thereby reducing the tax chargeable on those profits.
The nature of the asset will determine the amount of allowances claimable. Some assets can be eligible for allowances of 50% of the cost of the asset. The normal rate is 25% per annum.
Cars are the least effective when it comes to claiming allowances. Even though allowqances are available, they are subject to a myriad of restrictions which renders them less than ideal.
The nature of the asset will determine the amount of allowances claimable. Some assets can be eligible for allowances of 50% of the cost of the asset. The normal rate is 25% per annum.
Cars are the least effective when it comes to claiming allowances. Even though allowqances are available, they are subject to a myriad of restrictions which renders them less than ideal.
Eric Mc said:
Expenditure on assets (such as plant and machinery or cars) CAN result in a lowering of the Corporation tax bill. Capital Assets are usually eligible for Capital Allowances. Capital Allowance are offset against the business profits thereby reducing the tax chargeable on those profits.
The nature of the asset will determine the amount of allowances claimable. Some assets can be eligible for allowances of 50% of the cost of the asset. The normal rate is 25% per annum.
Cars are the least effective when it comes to claiming allowances. Even though allowqances are available, they are subject to a myriad of restrictions which renders them less than ideal.
Low CO2 cars still give a 100% capital allownace year 1 don't they? Under 120mg as I recall.The nature of the asset will determine the amount of allowances claimable. Some assets can be eligible for allowances of 50% of the cost of the asset. The normal rate is 25% per annum.
Cars are the least effective when it comes to claiming allowances. Even though allowqances are available, they are subject to a myriad of restrictions which renders them less than ideal.
Has ICT fallen back to 50%? I thought there was a period when it was 100% in year 1?
I was only talking in general terms. There are lots of variations in the rates for different classes of assets, and they can change depending on the whim of the Chancellor and what he wants businesses to spend their money on. In the past there have been 100% allowances on assets such as computers. At one point, 100% allowances could be claimed on ANY item of plant and machinery - but ALL cars were excluded.
Next year there will be some fundamental changes to the whole treatment of capital expenditure for small businesses but the full details of these changes have not yet been released.
Next year there will be some fundamental changes to the whole treatment of capital expenditure for small businesses but the full details of these changes have not yet been released.
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