Tax Avoidance: Are they all at it ?

[Pudney]

If it meant the difference between just scraping by (hand to mouth) and having a bit of money to spend, then YES. That's a quality of life issue. I'd be quite happy to be paid cash in hand to top up my (low) income.

If it was the difference between one Farrari or two, then NO.

Let's face it, the richer you are the more tax becomes merely a nuisance, as opposed to having an impact on your quality of life.

People who earn over 75k and dodge tax are scum.

What about if it would save you tax and create jobs for others?

 

[Moothead2]

Let's face it, the richer you are the more tax becomes merely a nuisance, as opposed to having an impact on your quality of life.

People who earn over 75k and dodge tax are scum.

I'd say it was more of a bell curve than anything else.

Edit: actually, more up and down up and down at the point at which the bands change.

 

[FoxEye]

What about if it would save you tax and create jobs for others?

That old chestnut. It's a myth, and has been debunked thoroughly.

The argument that giving the rich tax breaks helps create jobs is a complete deception.

 

[Pudney]

That old chestnut. It's a myth, and has been debunked thoroughly.

The argument that giving the rich tax breaks helps create jobs is a complete deception.

Really? Because I know of several small start ups employing people who are only able to do so due to investment by rich people. And the only reason they invest its for tax breaks.

 

[Floogie]

There is no mention of anything, people assume it's dubious methods but in my experience most schemes marketed are generally fairly standard ways of mitigating tax. Efficiency isn't a weasel word, it's what mitigation is. If you don't like tax efficiency go on a crusade against all the self employed users on this forum with ltd companies who pay themselves dividends.

Efficient tax planning is all about using legislation to best effect, not abusing it and is normal terminology, if someone wants to ignore that fine, pay more tax if you like, but to suggest it's underhand with no other knowledge is ridiculous.

So if tax efficiency never abuses legislation (or lackthereof) then why did Amazon and Northern Shell describe their tax avoidance as "[structuring] its tax affairs in a tax efficient manner"? Why did Jimmy Carr's lawyer responding to his clients tax avoidance as "managing his affairs in a tax efficient manner"?

In taxation terminology is crucial from an economic and legal standpoint. The term 'tax efficiency' tells us nothing about the particular activities undertaken and it's certainly nothing to do with 'efficiency'.

 

[Pudney]

So if tax efficiency never abuses legislation (or lackthereof) then why did Amazon and Northern Shell describe their tax avoidance as "[structuring] its tax affairs in a tax efficient manner"? Why did Jimmy Carr's lawyer responding to his clients tax avoidance as "managing his affairs in a tax efficient manner"?

In taxation terminology is crucial from an economic and legal standpoint. The term 'tax efficiency' tells us nothing about the particular activities undertaken and it's certainly nothing to do with 'efficiency'.

Both methods are legal, moving offshore has been going on for years and is normal international tax structuring. If it was so bad why hasn't hmrc challenged it and won?

K2 I know less about and won't comment except to say perfectly legal as far as I'm aware.

In any case, the methods I posted are all legal ways to reduce tax and are encouraged. Standard tax efficiency, just like accelerating capital expenditure, explicitly allowed in legislation as another example.

 

[FoxEye]

I guess there's a reason why "legal" and "moral" have two different definitions.

If you're happy to live in a society where 2% of the population control 95% of the wealth, then tax avoidance is just another means of maintaining the status quo. It's easier for the rich to do it than the lower income earners who can't afford an accountant and are much less likely to be educated about the loopholes.

Anyway, it's not only the wealthy who can create jobs. The government can use that tax income to create jobs themselves.

Not to mention our deficit which still needs paying off. And our infrastructure which needs a lot of investment, still. And various rejuvenation projects which need financing.

 

[Floogie]

Both methods are legal, moving offshore has been going on for years and is normal international tax structuring. If it was so bad why hasn't hmrc challenged it and won?

K2 I know less about and won't comment except to say perfectly legal as far as I'm aware.

In any case, the methods I posted are all legal ways to reduce tax and are encouraged. Standard tax efficiency, just like accelerating capital expenditure, explicitly allowed in legislation as another example.

You are backpeddling now Pudney. You initially said that 'tax efficiency' didn't involve abusing legislation (or the lack of it) and was simply tax mitigation. Sure these schemes may currently be legal (in that they exploit the existence of legislative gaps) but similarly they might also be illegal. They just haven't been tested yet. Both of them involve abuse to the point they eventually be reclassified as tax evasion.

Why the HMRC hasn't challenged many others of these avoidance schemes is varied and roughly can be attributed to a lack of:

• resources
• a broad legislative rule for use in the courts
• transparency in international taxation reporting
• political will

The final one obviously being key of course. This unlikely to catch any tailwind until the public understand the difference between mitigation and avoidance and how the latter robs our national wealth.

 

[Pudney]

You are backpeddling now Pudney. You initially said that 'tax efficiency' didn't involve abusing legislation (or the lack of it) and was simply tax mitigation. Sure these schemes may currently be legal (in that they exploit the existence of legislative gaps) but similarly they might also be illegal. They just haven't been tested yet. Both of them involve abuse to the point they eventually be reclassified as tax evasion.

Why the HMRC hasn't challenged many others of these avoidance schemes is varied and roughly can be attributed to a lack of:

• resources
• a broad legislative rule for use in the courts
• transparency in international taxation reporting
• political will

The final one obviously being key of course. This unlikely to catch any tailwind until the public understand the difference between mitigation and avoidance and how the latter robs our national wealth.

No, I'm just able to disassociate perfectly reasonable, legal and encouraged methods of reducing tax from more aggressive planning techniques that flout the spirit if not the wording of legislation.

Just because you have issues with the word "efficient" doesn't mean there is anything wrong with it. That's why there's "efficient planning" and "aggressive planning". One is normally sold as an acceptable method of tax mitigation such as EIS or VCTs whereas the other is generally sold with the inherent disclaimer that they're open to attack by HMRC and a liable to be nullified by changes in legislation.

Aggressive methods should be combated if they end up going against the law, but to immediately tarnish all planning methods with the same brush is naive at best.

People automatically assume that the fact someone is paying a low rate of tax must mean they are abusing the system, when they have no idea of what exactly that person is doing to reduce their tax system.

I just believe that without the knowledge of what a person is doing it's not correct to judge how they structure their affairs. As indicated I know of one ridiculously wealthy person who manages his affairs by investing in many start ups, investing in jobs and new technologies. I know of others who reduce their tax by donations. I know of companies who just make sure they place orders a month earlier when they have a big capital spend going on. None of those are "abusing" the system yet are tax efficient.

As for HMRC, you also forgot a lack of competency. When the figures given in the media are produced by an organisation that fundamentally doesn't grasp the rules they are meant to enforce you wonder how accurate they are. In actual fact any number, especially the "tax gap" should be taken with a mountain of salt.

So yes, as far as I'm concerned "tax efficient" is tax mitigation. Aggressive tax planning is what needs to be watched and kept in check.

 

[Tefal]

He is simply refusing to exploit the gaps that exist within current legislation in order to deliver higher rates of profit at the expense of everybody else.

No actually he's spending a little bit of money to exploit a current media trend to increase his publicity so he can increase his future income.

Just unlike the tax avoiders he's doing it under the guise of being "good" rather than "out for himself".

Same end different means.

 

[Tefal]

Charitable donations aren't a loophole.

I thought they were one of the biggest loopholes that allowed companies massive tax cuts while donating to organizations like the catholic church etc?

Which means all tax payers are then subsidizing what ever charity is chosen without consent.

 

[kitch9]

First thing i thought of when the Jimmy Carr news broke, was a question of "why is this news. Surely everybody knows that all the TV presenters, Footballers, contracters and god knows who else are all at it"

And sure enough here we are :

http://www.dailymail.co.uk/news/art...l-tactics-presenters-paid-books.html#comments

Yes its a Daily Fail rant, but how many more revelations are we going to have before we realize they are all at it ?

There is nothing wrong with people setting up their own company and invoicing their work out.

Its our goddamn god given right.

Anyway how the hell does the BBC give out proper employment contracts to actors who may be killed off in their storylines, can you imagine the tribunals for unfair dismissal, unless the BBC systematically kills characters off every 2 years?

 

[kitch9]

deleted

 

[MadMossy]

I pay my share of tax, so should everyone else.

 

[Floogie]

No, I'm just able to disassociate perfectly reasonable, legal and encouraged methods of reducing tax from more aggressive planning techniques that flout the spirit if not the wording of legislation.

The examples I've given clearly flout the spirit of the Ramsey principle (ie. the legislative tool we have to determine mitigation or evasion).

If you don't think these given schemes that reduce tax liability down to 1% is "aggressive [tax] planning" then what is? .5%? .25%?

Claiming that these avoidance schemes are equivalent to mitigation schemes is wrong and serves no purpose than to blur both the legal and moral distinction that exists between them.

As for HMRC, you also forgot a lack of competency. When the figures given in the media are produced by an organisation that fundamentally doesn't grasp the rules they are meant to enforce you wonder how accurate they are. In actual fact any number, especially the "tax gap" should be taken with a mountain of salt.

I agree. The tax gap of 35bn is a work of fiction. When you examine how its calculated then it is apparent the real figure is likely to be approximately 95bn (as is speculated by others in the industry).

 

[Floogie]

No actually he's spending a little bit of money to exploit a current media trend to increase his publicity so he can increase his future income.

Just unlike the tax avoiders he's doing it under the guise of being "good" rather than "out for himself".

Same end different means.

If you read the guys blog then it appears the Times bought it up in asking about topical issues instead of his book. So by his account at least, you are wrong.

In any case, I couldn't care less about the motive as long as his tax affairs are structured within the spirit of the law.

 

[Mark M]

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.

Damn, all those years to become a chartered accountant and I cant even give advice on selling socks

 

[pitchfork]

I wouldn't avoid paying tax altogether, I certainly wouldn't pay 1%.
Strangely enough I actually care about this country's economy.

I might take a small avoidance thing, pay say 75% of what I'm meant to. Give a good chunk of savings to Amnesty international.

 

[robgmun]

I wouldn't avoid paying tax altogether, I certainly wouldn't pay 1%.
Strangely enough I actually care about this country's economy.

I might take a small avoidance thing, pay say 75% of what I'm meant to. Give a good chunk of savings to Amnesty international.

Same here, i'd be happy with paying 10-20% tax if i was a millionare. I wouldn't go as low as 1%, that's taking the ****. But 45-50% is financial rape! I'd want HMRC to take me out to dinner first if they going to **** me!

 

[estebanrey]

Anyway how the hell does the BBC give out proper employment contracts to actors who may be killed off in their storylines, can you imagine the tribunals for unfair dismissal, unless the BBC systematically kills characters off every 2 years?

Quite easily.