Recently there has been publicity about tax avoidance schemes relating to professionals artificially channeling their earnings through trusts. The most public example is the Penny & Hooper case.
The taxpayers who ill advisedly entered into such schemes not only have the considerable cost of buying the scheme or advice, they have to repay the tax avoided plus interest and penalties, they face legal costs, and they have the personal cost and stress of being involved in an unpleasant battle with the IRD.
There are legitimate ways to minimise tax, however, taxpayers need to be very careful and they need to ensure they have the right professional advice in order to ensure they are not creating a monster that will come back at them.
Finally, Mr. Russell’s personal tax assessment of $15 million is reported to have grown to $200 million through penalties and interest. This demonstrates that if you owe tax, it should be dealt with on an urgent basis, as penalties and interest can soon make the debt grow unmanageably large.