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What happens if a liability is accidentally increased? Tax normalisation may be the key
KEY POINTS
- Tax avoidance measures can correct deliberately reduced liabilities.
- Tax normalisation should be able to correct inadvertently increased liabilities.
- Three case studies illustrate the “normalisation” principle.
- Correcting incompletely constituted trusts.
- A transfer that must be reversed should not result in a tax liability.
- Applying the principle of equity to tax matters.
In a world where using one’s nil-rate band means taking a risk that you will be dragged before the public accounts committee and subjected to criticism for being sneaky and immoral it is dangerous to even mention the possibility of paying less tax than HMRC see fit to demand. Yet that is exactly what this brave article does.
Despite the above premise however this article is not about tax avoidance. It is...
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