. In 2001 there were stories in the papers about the increasing cost of employing nannies, especially in London. I wrote an article explaining that the cost would be reduced if the nanny agreed to be employed through a personal service company, taking pay largely through dividends, and thereby eliminating income tax and NI in exchange for a modest corporation tax bill. A piece of legislation called IR35 only applied to services provided to businesses at the time, and I argued that a private individual hiring a nanny was not a business. I was surprised to be contacted by nanny agencies asking if they could use this arrangement. I explained that it wasn't a 'scheme' as such, but simply arose from the way the legislat){kind=link}
Tax hacks: exploiting holes in poorly drafted regulations will always be an emotive issue
Email your tax questions to Mike via email: taxhacks@telegraph.co.uk
Exploiting tax loopholes is an emotive issue. Some readers will say that we are entitled to use legal means to reduce our tax bills. Others may believe that in doing so we deprive the Government of funds to pay for vital public services.
In 1994, while in opposition, the Labour party published a paper called “tackling tax abuses”, understood to have been written by Gordon Brown – who of course went on to become Chancellor and then Prime Minister.
It included the comment: “It is the complexity of the present system that has encouraged the growth of a flourishing tax avoidance industry.”