Legitimate Tax Planning

The UK General Anti-Abuse Rule (GAAR) does not ban all tax avoidance. It bans abusive tax avoidance. It effectively describes what the legislation considers acceptable. This approach clarifies the ‘grey area’. It confirms that the advice of Charles Marcus is consistent with UK legislation.

The Guidance clearly states that it is entirely reasonable to take tax consequences into account when deciding which course of action to take. A decision to accumulate most of the profits to be paid out in the future by way of dividend, rather than by paying a higher salary, should in normal circumstances, be outside the scope of GAAR. We have confirmation of the long-established practice that employer and employee are free to agree mutually acceptable terms of employment, including salary, subject to local legislation.

The GAAR confirms the continuing compliance of the Charles Marcus arrangement which has been accepted by HMRC since 1998