More IR35/IT Contracting stuff (sorry)

[_DJ_]

Could someone clarify the legality of some of the more 'imaginative' schemes promoted by umbrella companies to avoid tax. In particular, there's a scheme which involves working for an umbrella company, who pay you a minimal amount, then give the rest in the form of a depreciating foreign currency loan (or something like that). They claim you typically pay 25% tax overall rather than the usual 40%. Surely that's not legal, and if it is aren't accountants obligued to tell the revenue about the tax avoidance scheme (rendering it a short term tactic?).

thanks,
Darren.

[Eric Mc]

Furness V' Dawson - I think any convoluted schemes set up with tax avoidance as their sole raison d'etre fall foul of the decision arising from this case which dates back to 1984. Namely, a scheme has to have a genuine commercial reality behind it, other than the saving of tax, for it to be allowed.

Asking accountants to submit tax avoidance schemes in advance is merely giving the Inland Revenue the opportunity to make a decision before rather than after the event.