Introduction:
This is the most sensitive area of tax planning and one which causes us to clarify certain points before anyone reads any further.

We are not marketing a 'tax scheme' - but simply offering clients access to an investment (through an FSA qualified IFA). The investment has a high chance of success in that it could earn profits out of which taxes can be paid in full. The reason we mention them under 'income tax planning' is that these investments do fail from time to time, and should they 'fail' the client can claim an income tax benefit, which helps to soften the blow of making an investment that does not succeed.

We should point out that 'Section 16A Taxation of Capital Gains Act 1992' specifically states that no loss claims would be allowed if the main purpose of the investment were to seek a tax advantage.

So, before reading further - this investment has been sourced as we feel it has a good chance of success, such that profits after tax would be large enough to allow an individual to pay their personal income tax (either in part or in full).
 
HOW DOES IT WORK?
A UK tax payer subscribes for shares in a special Bio Medical company. They subscribe for a minimum value of £250,000. We can help provide them with funds, such that they only pay 15.9% as pesonal cash (Min = 15.9% x £250,000 or £39,750).

The Bio Medical company then carries out a specific series of drugs trials, which will either "pass" or "fail".

If they "pass" the company will sell the associated intellectual property and the investor makes a considerable profit (after repaying the finance). The profit would be expected to exceed the sum of the investment, plus the original tax liability. The profit will be deemed to be a capital gain on the shares, so taxed at 18% - but even accounting for this, the 'net' proceeds represent a very significant return. This is the hoped for final outcome.

If however the trials "fail" - the intellectual property, and hence the shares, become worth very little and a Section 131 claim can be made against income or capital gains.

Having subscribed for £250,000 (min) worth of shares at a cost of £39,750 the investor can make a claim against their income tax arising in the current or previous year. The claim, at 50% tax rates would be £250,000 x 50% = £125,000. Having spent £39,750 in the first place, this represents a profit of £85,250 or a return of over 200% on money deployed. Not as much as would be the case for a successful trial, but still acceptable.

The provider of this planning has a well established business, which itself uses the Governments own provisions - which have been set up to help attract funds into the UK Bio Medical Research area (Basically it allows profits to be taxed at 10% and is given the green light to explore all its options for attracting investment). Added to this, the provider has taken the trouble to reassure investors by pre-paying for tax support up to the highest Court, rather than just to first tier tribunal. A measure that helps support the view that this is a very robust structure.

But please remember - the intention of introducing you to this investment is for it to succeed and for profits to be made. The tax implications of a failure are secondary and, with luck, should not be an issue.

If you want to know more, simply Contact Us Now.