Tax Avoidance: Are they all at it ?

Housey · 24 Jul 2012 at 14:59

elmarko1234 said:
Somebody donating to a charity to reduce their tax liability isn't the same as spending time doing actual charitable work.

The latter tends to indicate the person has motivations which stretch further than personal financial gain.

So giving money in this circumstance has no value or is perhaps 'grey money' at best, giving time does? I suggest most of the people who run charities would laugh at such a suggestion.

As someone who has given time and money to various charities over the years, but also someone who legally manages his personal tax liability, how do you view me?

Glaucus · 24 Jul 2012 at 15:01

Housey said:
So giving money in this circumstance has no value or is perhaps 'grey money' at best, giving time does? I suggest most of the people who run charities would laugh at such a suggestion.

As someone who has given time and money to various charities over the years, but also someone who legally manages his personal tax liability, how do you view me?

His head will explode, you don't fit in his pidgeon hole views.

kinobestew123 · 24 Jul 2012 at 15:04

Floogie said:
Many of these schemes are not legal (or illegal) irrespective of whether they are proposed by tax professionals. Let's not give them legitimacy by claiming that is the case. Again, the problem is having enough will and resource to determine the legality of these schemes under legislation that exists here and now.

What makes you think they are not legal? As you even say your self below, they are "exploiting unlegislated gaps that exist". That isn't illegal as far as i'm aware.

Floogie said:
I don't mind if the rich minimise their tax. However it must be done through the tax instruments as provided by UK law and not by exploiting the unlegislated gaps that exist between it or the inability of HMRC to investigate my avoidance scheme due to chronic underinvestment and poor political will.

Why must it be done through tax instruments provided by UK law? That's your opinion, which is not shared by many including me. I have no problem with people utilising gaps in legislation. The current legislation says that tax advisors must disclose to the government details of schemes they are promoting. Presumably this has been done for the schemes that the majority of the rich are using.

Floogie said:
Again, I refer you back to the fact many of these schemes are breaking existing legislation and they just haven't been investigated yet. Needless to say, further extensive legislation in this area is required nonetheless.

I highly doubt that this is the case if the scheme has been set up and properly administered by a professional firm. The professional firms owe a duty of care to their clients and if the client was found to be falling outside of current legislation then that firm would be liable for the bad advice they gave. As such, the majority of firms are very careful about the approaches they take. As I said above, these schemes are disclosed to the government anyway.

I am not saying that there are no illegal schemes being used. But these fall under tax evasion and I hope they are caught.

Floogie said:
No, I'd disagree the government has been tightening the tax system. It's increased the amount of individual taxes but has been extremely reluctant to close the avenues that many businesses and wealthy indivduals exploit. This is due to parties that are overly representative of these such interests and the prevailing economic orthodoxy.

I think we have got confused here, I agree that the government has been tightening the tax system and will continue to do so. What I wrote probably wasn't clear enough.

Again though, I have no problem though with individuals exploiting tax loopholes. I don't blame them, it's not illegal afterall as I keep stating.

Floogie said:
Indeed, but I'd wager those jobs are insignificant to those that could be created through closing the tax gap of 35bn (as per HMRC's fudged figures) or 95bn (if you believe the independent analysis).

The best way in my opinion of plugging gaps to begin with is to catch people clearly evading tax, i.e. not paying any at all. This is the biggest challenge.

Floogie said:
No, as I'm not simple-minded enough to believe that an effective tax regime has any sole relationship to communism.

But but but

elmarko · 24 Jul 2012 at 15:07

Housey said:
So giving money in this circumstance has no value or is perhaps 'grey money' at best, giving time does? I suggest most of the people who run charities would laugh at such a suggestion.

As someone who has given time and money to various charities over the years, but also someone who legally manages his personal tax liability, how do you view me?

You are the one who gave the two examples - not me.

One of somebody who gave time to charity & another of somebody who donated to reduce their tax burden.

I never implied a cross-over didn't exist - I was simply responding to the two scenarios you laid out.

Glaucus said:
His head will explode, you don't fit in his pidgeon hole views.

Wake up,

If you care to read you will see I was responding to his examples.

Tax which is avoided or evaded results in a net reduction in tax received by the government - part of that money goes towards the welfare state & the NHS - two things which greatly ease the suffering of the working classes in the UK.

I'd say a person who supports a taxation avoidance method which indirectly results in the suffering over the vulnerable (whilst doing personal charity work) is a cut & clear case of somebody who is suffering from cognitive dissonance.

kinobestew123 · 24 Jul 2012 at 15:08

Raymond Lin said:
That is distinguish with what? By putting it in the ad?

A sale is a sale.
Profit is profit.
Tax is liable on profit as income tax or capital gains.

Income tax isn't exempt from an individual but only applied to a company which I am sure you are aware.

What on earth?? What does that last sentence mean? A company pays corporation tax, an individual/sole trader/partnership pays income tax. Whether or not this is through the PAYE system or a tax return is dependent on the situation.

Not all sales are taxed, for example I can sell my house that i've owned for a long time and now need to sell to pay my bills and not pay any income tax. It all depends on whether you're trading or not. The following badges help you and judges in court decide:

http://www.hmrc.gov.uk/manuals/bimmanual/bim20205.htm

realBabelfish · 24 Jul 2012 at 15:08

Housey said:
I missed this bit, but what it shows is you believe yourself worthy because you give time to others. If a wealthy person gave cash from their business to a charity to reduce their tax liability what would you think of them?

All I see when I read your posts here is someone who is a little naive.

it was referring to another thread. i dont consider myself worthy at all. i dont do anything now as i dont have the time, or i prefer to spend it with my son. i maybe shouldnt have put that as i knew it might be taken out of context.

i dont mind money going to charity, better than the tax man. i would love to give more but cant afford to now im 4 days a week and mrs has quit work to look after our son.

Raymond Lin · 24 Jul 2012 at 15:09

Moses said:
No, not necessarily. The key word is commerciality.

Moses said:
Are you just making it up as you go along? It's frankly embarrassing . Please don't talk as though you know what you're going on about, as people are going to be misled.

Try Googling "HMRC + commerciality"...

Third result = http://www.hmrc.gov.uk/guidance/selling/examples.htm.

Then I ask, how do you define it if someone collects an item, say old records and decide to sell the lot in one go? For sake of argument he has made thousands and there are thousands of sales.

Each case clearly is taken on context by context basis.

Selling the odd sock sure, no tax.

But selling a thousand you do. I get that.

Where is the line, when the intention change?

What if I buy 1000 pairs, wears them once a day each and sell?

(yes I am making this up as I go along, and why I don't do my own taxes and have an accountant!)

realBabelfish · 24 Jul 2012 at 15:11

Raymond Lin said:
That is distinguish with what? By putting it in the ad?

A sale is a sale.
Profit is profit.
Tax is liable on profit as income tax or capital gains.

Income tax isn't exempt from an individual but only applied to a company which I am sure you are aware.

but if you sell old stuff on ebay you will rarely get more than you paid for something... hence zero profit.

Jambo · 24 Jul 2012 at 15:12

You don't pay tax on selling your personal possessions. It's only if you buy goods with the sole intention of selling them for a profit.

http://www.theregister.co.uk/2007/02/09/ebay_uk_traders_tax_guidance/

I'm not a fan of the BBC licence fee but it could be argued they are spending our money wisely. Plus maybe this scheme helps them to attract the best talent and compete with salaries.

Also I don't think anyone is paying 20% tax as per that Daily Mail article. The 20% mentioned is corporation tax for the company. They still have to get the money out probably paying dividends which they are taxed on as well.

So the savings are not as significant as it's being made out.

Raymond Lin · 24 Jul 2012 at 15:14

kinobestew123 said:
What on earth?? What does that last sentence mean? A company pays corporation tax, an individual/sole trader/partnership pays income tax. Whether or not this is through the PAYE system or a tax return is dependent on the situation.

Not all sales are taxed, for example I can sell my house that i've owned for a long time and now need to sell to pay my bills and not pay any income tax. It all depends on whether you're trading or not. The following badges help you and judges in court decide:

http://www.hmrc.gov.uk/manuals/bimmanual/bim20205.htm

Lol I agree, some things are tax exempt! Exactly my original point, like ISAs and pensions which we all take advantage and we all do it...I realise I am getting myself in a muddle.

The point is we all avoid paying tax in some ways...the eBay stuff was erm wrong.

realBabelfish · 24 Jul 2012 at 15:15

Glaucus said:
His head will explode, you don't fit in his pidgeon hole views.

really?

still here and fine.

its you who jumped to conclusions. i seem to recall it was you being an arse in the last tax thread (jimmy carr) so i posted what i said last time (out of context admittedly). maybe it wasnt you at all. i seem to remember the sig image. if it wasnt then fair play and i apologise.

Raymond Lin · 24 Jul 2012 at 15:15

realBabelfish said:
but if you sell old stuff on ebay you will rarely get more than you paid for something... hence zero profit.

Collectables?
How about a signed Beatles album. You got them 50 years ago with the foresight of making a fortune on it

kinobestew123 · 24 Jul 2012 at 15:17

Raymond Lin said:
Lol I agree, some things are tax exempt! Exactly my original point, like ISAs and pensions which we all take advantage and we all do it...I realise I am getting myself in a muddle.

The point is we all avoid paying tax in some ways...the eBay stuff was erm wrong.

Haha, gotcha. And yes, I totally 100% agree. They're just far more simple examples of ways we all avoid paying tax that we don't need to. It's just that richer people do it on a grander scale which in my opinion (and the law's opinion at the moment) is fine.

realBabelfish · 24 Jul 2012 at 15:17

Raymond Lin said:
Collectables?
How about a signed Beatles album. You got them 50 years ago with the foresight of making a fortune on it

Shhh, i have some Beatles original LPs....

i guess thats a grey area though.

Jonnycoupe · 24 Jul 2012 at 15:18

Jambo said:
Also I don't think anyone is paying 20% tax as per that Daily Mail article. The 20% mentioned is corporation tax for the company. They still have to get the money out probably paying dividends which they are taxed on as well.

So the savings are not as significant as it's being made out.

Plus if they are charging VAT for their services then thats extra money to the treasury.

I fit the 'only pay 20%' tax thing but I know for a fact I wouldn't be generating so much income for the government if I was a permanent employee on PAYE. Regardless of that, if I did keep it all, or 99% on K2, it would be spent here in the UK. It's the same circle the money gets fed back into but doesnt have an Olympics or foreign aid portion taken off the top by UK plc.

robgmun · 24 Jul 2012 at 15:19

mattyg said:
Scrap NI and introduce a 30% flat rate tax. get rid of the whole and very complicated tax system.

You know, the more i think about this the better it seems. I fully support it and if i ever do become a millionaire i might even not tax avoid to show that support

Housey · 24 Jul 2012 at 15:21

elmarko1234 said:
You are the one who gave the two examples - not me.

One of somebody who gave time to charity & another of somebody who donated to reduce their tax burden.

I never implied a cross-over didn't exist - I was simply responding to the two scenarios you laid out.

I gave someone else's standpoint and I questioned it and you supported the point by suggesting there was a difference. So I said what if I do both and also reduce my tax liability, what sort of a person does that make me, a fair question as the person helping out was being used to elevate them as someone with better values than someone who doesn't do so do you not agree?

Broad brush statements are silly that is my point and to imply that someones objective is simply to reduce their tax liability first rather than supporting the charity that perhaps helps people with cancer with the added benefit of some tax savings to boot is perhaps to show their true colours and show them as far from objective.

Glaucus · 24 Jul 2012 at 15:22

mattyg said:
Scrap NI and introduce a 30% flat rate tax. get rid of the whole and very complicated tax system.

yep and stupidly high tax free allowance. be it 15k, 20k or whatever. Then a percent that balances. Can get rid of most of the tax office and enforcement and save money on that as well.

Dj_Jestar · 24 Jul 2012 at 15:24

Jambo said:
Also I don't think anyone is paying 20% tax as per that Daily Mail article. The 20% mentioned is corporation tax for the company. They still have to get the money out probably paying dividends which they are taxed on as well.

So the savings are not as significant as it's being made out.

The "scandal" such as in Jimmy Carr's case is that the company is loaning him the money on a permanent basis (i.e. he's never going to pay it back) which is as good as tax free.

The other part of the "scandal" was that his company is registered in one of the Channel Islands, which has much lower taxes for corporations and director's loans.

Raymond Lin · 24 Jul 2012 at 15:25

Moses said:
It's pointless coming up with hypotheticals, just to come up with an ambiguous scenario, so I'm not even going to consider it. If you have a real example, as in you are doing something in real life you're unsure of/is unclear, then it would obviously be prudent to contact HMRC/an accountant registered with the Chartered Institute of Taxation.

The point is that what you said was incorrect, and was stupendously bad advice... especially given your background.

I detest BLP with a passion.