Friday, 26 February 2016

RULE 76: Be One Step Ahead Of Your Tax Collector


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Barrister Allen Onyema, Founder of Air Peace Nigeria Ltd

You must never ever try to evade paying your taxes. If you do you will go to prison - and quite rightly so. No, I am not on the side of the tax collector. There’s a difference here between evade (criminal) and avoid (sensible). There is a line between making sure you aren’t giving money unnecessarily to the tax collector avoiding - and deliberately evading tax illegitimately. Cross that line at your peril. But there should be no need to do so. There are many good people out there who will give you all the advice you need.

The more money you have, the greater the need to avoid tax - I stress this is not the same thing at all as evading - and the more expensive it becomes to do so. Obviously there is a tipping point whereby you are obliged to hand over your tax affairs to experts who naturally cost an arm and leg - so you can avoid paying the tax collectors the other arm and leg you have left. 

“As you move up the prosperity ladder the tax issues get more complex. And there are all sorts of options. But remember the tax collectors are closing loopholes, changing laws, cutting off avenues as fast as you and your expensive experts can devise ways of avoiding tax”

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As you move up the prosperity ladder the tax issues get more complex. And there are all sorts of options. But remember the tax collectors are closing loopholes, changing laws, cutting off avenues as fast as you and your expensive experts can devise ways of avoiding tax. It’s like a chess game only much more exciting and expensive.
I am not going to give you any specific advice because it changes too quickly and I don’t want to get sued but areas worth bearing in mind are:
Consider establishing a Limited Company - it can attract less tax and give you all sorts of options not available to the ‘self employed’. I’m assuming you are making some money - if you aren’t, there is obviously no tax to save as there is no tax to pay.
Bear in mind also that anyone can get your company records from Companies House so if you are bigging yourself up you can get caught out.
• Always make sure you make full use of your allowances - use them or lose them.
• Always consider if something is tax deductible before you buy it.
• Become a resident in a tax haven - but be quick as they are being shut down fast.
• Invest heavily in your own pension fund - its tax free - or as about tax free as you can get these days.
• Become a tax nomad and wander the world not paying tax anywhere - watch out as a UK tax liability will arise when either income or a capital gain is remitted into the UK and there are circumstances when you can be based abroad but still pay tax (it depends on residency, ordinarily residency and domicile).
And of course make sure you are well up on investments that you don’t have to pay tax on - get good advice and be willing to pay for good advice. 

From The Book; The Rules of Wealth by Richard Templar
(Read Rule 77 of Rule of Wealth on Monday at Asabeafrika)

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Gbenga Dan Asabe

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