What a difference a day can make in tax planning

The accrued income scheme was introduced some years ago to prevent the practice of bond-washing, whereby a fixed interest security was sold just prior to going ex div so that the accrued interest was taxed as a capital gain and subject to tax at 30%, rather than as income and taxed at the higher rates of income tax. In the June 2006 case of Philippa D'Arcy vs R&C Commrs, the accrued income scheme was used to shelter income of £1.5m so avoiding tax of £0.6m. The case was heard before the Special Commissioners and the taxpayer won. The case is interesting for several reasons: l HM Reven...