The crux of the matter is whether there is a real business. If there is, it might be painful to go through the audit by HMRC and you might have to prove your position before the First Tier Tribunal to win but with the right evidence and enough hard work you stand a chance.
UK tax planning
Not referrring to any particular business opportunity whether discussed on this thread so far or not.
Remember that if the main benefit (or one of the main benefits) of an intended course of action (known as 'an arrangement') is the obtaining of a tax advantage then the scheme promotor, or the person undertaking the scheme, must notify HMRC within 5 days of the scheme being available or within 30 days of implementation if you design the arrangement yourself. Failure to do so is an offence, even if the arrangement is correct, in a legal sense, and therefore it actually works. This remains the case even if there is a real business behind the arrangement.
If you think that these rules might apply, and you are a promoter, it is important to seek professional advice to confirm that the rules do not apply to your idea; or make a disclosure anyway to cover yourself. If you are using an arrangement that provides you with a tax benefit which is significant then make sure that you have been given a scheme number by the promoter or seek assurance from the promoter / seek your own professional advice to confirm that the disclosure rules do not apply OR talk to HMRC to confirm the position.
HMRC notes on these rules are reproduced below and the detailed version can be found at
http://www.hmrc.gov.uk/ria/disclosure-guidance.pdf. The rules are drawn to be as wide as possible, and Hallmarks 2-5 are most typically found:
Summary of the disclosure rules
Income Tax, Corporation Tax and Capital Gains Tax
The disclosure regime was introduced with effect from 1st August 2004 and was limited in scope to tax arrangements concerning employment or certain financial products. This was widened with effect from 1st August 2006 to the whole of income tax, corporation tax and capital gains tax.
A tax arrangement must be disclosed when:- it will, or might be expected to, enable any person to obtain a tax advantage;
- that tax advantage is, or might be expected to be, the main benefit or one of the main benefits of the arrangement; and
- it is a tax arrangement that falls within any description (“hallmarks”) prescribed in the relevant regulations.
In most situations where a disclosure is required it must be made by the scheme “promoter” within 5 days of it being made available. However, the scheme user may need to make the disclosure where:- the promoter is based outside the uk;
- the promoter is a lawyer and legal privilege applies; or
- there is no promoter.
The hallmarks are:- wishing to keep the arrangements confidential from a competitor;
- wishing to keep the arrangements confidential from HMRC;
- arrangements for which a premium fee could reasonably be obtained;
- arrangements that include off market terms;
- arrangements that are standardised tax products;
- arrangements that are loss schemes; and
- arrangements that are certain leasing arrangements.
Upon disclosure, HMRC issue the promoter with an 8-digit scheme reference number for the disclosed scheme. By law the promoter must provide this number to each client that uses the scheme, who in turn must include the number on his or her return or form AAG4.
A person who designs and implements their own scheme must disclose it within 30 days of it being implemented.
Separately, there is also a disclosure requirement for arrangements intended to provide a VAT advantage. These rules are unlikely to apply; the business needs a turnover of at least £600,000 per annum.
This is information only: take advice from a suitably qualified person not an internet chat forum