Monthly Archives: September 2017

The Great RU Bake Off – raising money for Macmillan Cancer Support
September 2017

It was cake for breakfast at The RU Group, but all in a good cause.

Members of the team dusted off their aprons and cooked up some fabulous cakes for everyone to enjoy at our Macmillan coffee morning.

As you’ll see from the picture below, there were some tasty treats on offer.








A very impressive £270 was raised for Macmillan, helping them continue to make a huge difference to people facing cancer.

Special thanks go to our team of bakers.



A sleeping dragon wakes on tax avoidance
September 2017

HM Revenue & Customs (HMRC) has come closer to using its weapon of last resort against tax avoidance schemes.

“Whack a mole” used to be a good summary of the battle between the extreme end of the tax avoidance industry and HMRC (together with its predecessor, the Inland Revenue).  First, some ‘creative’ minds would dream up a scheme that weaved through the labyrinthine tax legislation to make a tax liability disappear.  When the tax authorities became aware of the situation, more legislation would be produced to close the loopholes being exploited.  The ‘creatives’ would then move on to another tax-evaporating idea, sometimes even exploiting the anti-avoidance laws used to block a previous scheme.

In July 2013 the then Chancellor, George Osborne, took what was seen as a controversial step to end this merry-go-round by introducing the general anti-abuse rule (GAAR).  As its name suggests, the aim of the GAAR was to prevent the letter of the law being manipulated to prevent the spirit of the law applying.

The GAAR incorporates a “double reasonableness” test which basically required HMRC to show that the arrangement undertaken could not be “reasonably regarded as a reasonable course of action”.  The question of what represented a ‘reasonable course of action’ is determined by the GAAR Advisory Panel, which consists of three tax experts.

A dormant threat?

Once the GAAR was introduced, it seemed almost to disappear, as HMRC did not refer any cases to the panel.  This was thought to be because the mere existence of the GAAR meant that there was the Sword of Damocles hanging over any scheme that might be considered “abusive”.  There was certainly a noticeable drop off in new schemes being reported under the disclosure of tax avoidance scheme (DOTAS) rules.

In 2016 a GAAR penalty was introduce for newly caught schemes of 60% of the tax avoided, adding further power to HMRC’s armoury.  Then finally, last month, over four years after GAAR came into being, a first decision emerged from the GAAR Advisory Panel.  The case involved a convoluted payment-by-gold-bullion scheme which some experts thought would anyway have been defeated in the Courts, given their current stance on artificial avoidance arrangements.  In the event the Panel decided the arrangement was not reasonable.

Rather than a necessity, HMRC’s use of the GAAR may have been a warning that they are prepared to use the GAAR weapon, particularly now it has a large penalty attached to it.  The HMRC move is another reminder that, while there are plenty of legitimate ways to reduce your tax bill, something that looks too good (and/or convoluted) to be true is best avoided.  To discuss the many GAAR-free tax planning opportunities, please talk to us.

The value of tax reliefs depends on your individual circumstances.  Tax laws can change. The Financial Conduct Authority does not regulate tax advice.

What’s your inflation yardstick?
September 2017

Inflation was in the news last month in various guises.

August was a month when inflation hit the headlines several times trailing a cloud of acronyms:

The Bank of England Quarterly Inflation Report (QIR) revealed that the Bank now expects inflation (as measured by the Consumer Prices Index – CPI) “to peak around 3% in October”.  The Bank expects inflation will still be above its 2% central target by the end of the first quarter of 2020.  This forecast assumes that interest rates will rise by 0.5% over the period, in line with market expectations.  The Bank is relatively unconcerned about missing its target, saying that the overshoot “reflects entirely the effects of the referendum-related fall in sterling”.

Shortly before the QIR was published, news emerged that CPIH, the inflation measure favoured by the Office for National Statistics (ONS), had been approved as a National Statistic by the Office for Statistics Regulation.  CPIH is a variant of the more widely quoted CPI, the “H” being shorthand for the addition of owner occupiers’ housing costs (including council tax).  CPIH could ultimately replace both the CPI and the now discredited RPI.  The ONS view of the RPI is that it “is a flawed measure of inflation with serious shortcomings and we do not recommend its use.”

In mid-August, the ONS issued inflation statistics for July, showing CPI and CPIH both running at an annual 2.6%, but RPI 1% higher.  The July RPI is an important number, because it sets the basis for next year’s rail fare increases (although the government could change its mind and choose something below 3.6%).

The government’s use of RPI to ratchet up revenue was also in evidence on the day the inflation data was published.  Almost simultaneously the Student Loans Company confirmed that, from 1 September, the minimum interest rate for English and Welsh student loans started within the last five years will be based on the March 2017 RPI (3.1%), with a maximum addition of up to 3% taking the overall interest rate up to a ceiling of 6.1%.

Whatever your chosen yardstick for inflation, it is important not to forget its impact on your financial planning.  At the current 2.6% CPI/CPIH rate, the buying power of £1 will be little more than 75p in 12 years’ time.  Use today’s RPI and the same result arrives after just eight years.