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School fee planning: back in the Spotlight

Gordon W Buist (EQ Accountants) examines the impact of the settlements legislation on school fee planning arrangements.

A recap on the settlements legislation

Spotlight 62 highlighted an income diversion scheme that was clearly artificial and there will be few advisers who are surprised that the settlements legislation applies.

However Spotlight 62 does not announce a change in the way that HMRC interprets the settlements legislation; it serves as an important reminder to advisers that the settlements legislation is wide in scope and must be considered studiously when advising family companies. It is not limited to artificial avoidance arrangements.

The settlements legislation (now contained in ITTOIA 2005 Part 5 Chapter 5) aims to prevent an individual from obtaining a tax advantage by making arrangements designed to divert income to another person who pays income tax at a lower rate or is not liable to income tax.

For the settlements legislation...

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