Avoiding tax?

[Tycoon 2 B]

Is this possible? I am a property investor and would like to know if the following is true - if it is it might save me money...

"Where I can REALLY help you is with your investment properties and the purchase of future properties (wherever they might be) from within a mechanism that removes all Income, Capital Gains and Inheritance Tax liability for you.

The first thing we need to do, if you haven't done it already, is to form a UK Limited Company - which would cost about £250.

So think of some names you'd like to trade as and I'll have a look if one is available for you.

Once we've done that we set you up with a Lakeside Factoring Plan which in simple terms wraps your Limited Company in a Jersey Purpose Trust. Now you can do two things with this, or rather achieve two things:-

1. All income, gains/profits is Factored into your plan so thus removing it entirely from any association with you and your company and therefore any taxation of any sort in the future. This costs 16.66% of the money so settled, which is a lot less than the 40% taxation otherwise. Once inside this structure the money can interact with the outside world quite freely but without exposure to any future taxation on any growth it makes either in combination with or not with a mortgage for example.

2. All existing assets (property for example) can be transferred into this structure too at a cost of 4% or 5% of the value transferred (cost depends on the amount of work required to do this) and which transfer is either easy or complex depending on who you have your mortgages with. Because we can use roll over reliefs from private to corporate ownership there's no Capital Gain event triggered so no CGT. Once the property is inside the structure it can be sold without any CGT liability. Now it is not owned by you anymore, your trust owns it so there is no Inheritance Tax either.

"But, but, but what about my income" I hear you say....?

Well you don't want income do you, otherwise you'll pay tax......?

"But what do we live on" you say....

Simple, you don't take income you take loans from your own Trust and there is no income tax payable on loans is there - so no income tax, OK?!

"But if haven't any income I wouldn't be able to get a mortgage and buy other properties would I?" you ask

You don't need to, your trust does all that for you, it has income and its has assets (Collateral) and it does what you ask it to do because you are the Enforcer or ultimate decision maker for the trust as per Jersey Law. As we use one of the oldest and largest Trustee Companies in Jersey and Jersey States Law requires them to provide pound for pound indemnity for their trusts, your money and your assets are perfectly safe.

You tell your trust to set up the loan(s) and to roll up the capital and interest debt, which it will do, but you would still have a debt against your estate as far as the Inland Revenue were concerned, so any asset you still maintain outside your trust structure which might be subject to UK Inheritance Tax would be offset by this humungous loan. On your deaths the loans would die with you and the content of the trust would be available for the benefit of your beneficiaries (if there were any).

In other words no beneficiary would actually receive money or assets to compromise their own estate tax liabilities, they would be able to quite simply enjoy the contents of your estate through the trust completely tax free.

Once the Limited Company is set up there is a once off set up charge of £1,750 plus VAT for the Lakeside Factoring Plan and that is that.

It takes about 10 days to get everything sorted out and then off you go into your tax free life.

Your future business and personal transactions will be subject to Jersey Law and not that of the UK."

[johnfkavanagh]

Does the letter from your "adviser" also say that you will have "bad luck" if you don't forward it to your friends and family? That is the kind of animal we are dealing with here.

The likelihood is that you have received this "advice" from somebody with little or no tax training, qualifications or experience. If the adviser is not a fraudster, the promoter who has persuaded your adviser that the scheme works certainly is.

While there are some perfectly legitimate uses for non-charitable purpose trusts, what is being proposed here is really nothing more or less than fraud. The sole real "purpose" of the purpose trust is to evade tax. That is not a purpose which is likely to find favour with the Revenue or the Courts.

I will give you some free advice - no upfront fees, no percentage of your assets, nothing payable whatsoever. It may not save you any tax but it will keep you out of jail.

Do not even contemplate getting involved in this scheme. In my opinion, the prospects of your succeeding in saving any tax are zero. Do some legitimate tax planning with a legitimate tax adviser and make your fortune with a clear conscience.

The following is a quote from a report from a conference of the International Tax Planning association a few years ago:

"Reality is more important than appearance: behind a purpose trust or asset protection trust can be a simple evader who "only wants" not to pay some tax. Unfortunately, there are many intermediaries who will persuade taxpayers to set up evasive structures to which fraudulent investments are sold: the victim does not complain, lest the tax authorities find out.

There are many kinds of fraud. Con-men are numerous; clients are gullible. Trusts are often a mere façade, behind which is a tax fraud."

Wise words, in my opinion.

John Kavanagh
UK Tax Consulting Ltd
Chartered Tax Advisers
www.uktaxconsulting.co.uk
mail@uktaxconsulting.com
Tel: 020 7060 1660
Fax: 020 7060 1663

[Taxbar]

I believe that schemes like the one outlined above using a Purpose Trust only likely to lead to a Serious Tax investigation,resulting in penalites,interest, tax demands and large legal bills!

Daniel Feingold
STP
info@stratax.co.uk

[alik]

I have heard an offshore company could be more effective than an offshore trust if just buying 3-4 overseas properties - is this right?

I do know of people - earning a lot of money ie footballers that have off shore trusts, so must be effective at some stage??

[Tosh]

i agree