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ACCA Strategic Professional · Advanced Taxation (UK) · Appropriateness of planning measures to a taxpayer's circumstances and objectives

Hana, a higher rate taxpayer, plans to make a gift of a business asset and wants to understand how far she may go before planning becomes unacceptable. Which action would be most likely to cross the line into tax evasion?

Backdating a document so a gift appears to have been made earlier is tax evasion, because it deliberately misrepresents the facts to HMRC. Surviving seven years, using the £3,000 annual exempt amount and timing a disposal across the tax year end are all lawful planning.

  1. AMaking a lifetime gift and surviving seven years to remove it from her estate
  2. BClaiming the annual exempt amount of £3,000 on a disposal in the year
  3. CBackdating a document to show that a gift was made earlier than it really was, so that the seven year period appears to have been metCorrect
  4. DDelaying a disposal until after 5 April to fall in the next tax year

Explanation

Backdating a document to misrepresent facts to HMRC is dishonest and so is evasion. The other three are legitimate timing and relief planning: surviving seven years, using the annual exempt amount and timing a disposal across a tax year end. Only false documentation involves deception.

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