Tax Avoidance Or Tax Evasion

[Redcellar]

Telegraph article here

In summary

"Wealthy individuals who are avoiding the 50p income tax rate are to be targeted by 2,250 extra Government inspectors in a crackdown to be unveiled by Danny Alexander at the Liberal Democrat conference. "

When did tax avoidance become illegal? Tax evasion is, I understrand that. But when did it become OK to make judgements as to avoidance becoming illegal. If it is then why aren't we also 'investigating' second home owners and landlords too. These are ways to 'avoid' paying taxes on savings and earnings just as much as the rich avoiding taxes.

Or have the Telegraph used the wrong words and mean Tax Evasion?

[The Ayatollah Buggeri]

One of two possibilities: either it's just sloppy journalism and the writer failed to make clear that what was actually meant was the failure to pay tax for which someone is legally liable; or the tax inspectors intend to harrass those who are using legal measures to minimise their tax bills to such an extent that they either cough up or leave the country.

[Redcellar]

One of two possibilities: either it's just sloppy journalism and the writer failed to make clear that what was actually meant was the failure to pay tax for which someone is legally liable; or the tax inspectors intend to harrass those who are using legal measures to minimise their tax bills to such an extent that they either cough up or leave the country.

Don't you mean harass their accountants. LOL like that is ever going to work, they get so much money from the schemes they know the rules inside out and will run rings around HMRC.

We already have one of the most complicated tax systems and supporting laws in the world. Go on, make it more complicated with even more legislation, just so lawyers and accountants can earn more and the rich continue to avoid taxes.

If it'll make no difference, which it won't, then just suck it up and move on. Total waste of time and money IMPO.

[mirage]

I think the idea is to:

1. Clamp down on evasion, which is illegal.

2. Investigate avoidance, and legislate or change guidance to close loopholes that are seen as revenue generators.

[erranta]

Telegraph article here

In summary

"Wealthy individuals who are avoiding the 50p income tax rate are to be targeted by 2,250 extra Government inspectors in a crackdown to be unveiled by Danny Alexander at the Liberal Democrat conference. "

When did tax avoidance become illegal? Tax evasion is, I understrand that. But when did it become OK to make judgements as to avoidance becoming illegal. If it is then why aren't we also 'investigating' second home owners and landlords too. These are ways to 'avoid' paying taxes on savings and earnings just as much as the rich avoiding taxes.

Or have the Telegraph used the wrong words and mean Tax Evasion?

Increasingly irate and outraged fellow (ordinary?) UK citizen posters are starting to let cats out of bags >>>

You can see the corporate 'shills' in Parliament who purport to honestly Govern over us are directly involved - all the way!

Posted by: huff-n-puff (66-66) on September 18, 2011

I was once told by a 'toff' that

if all companies in GB paid the corporation tax then theoretically personal income tax could be abolished for all wage-earners. And the govt would have more money in the kitty than via personal income tax.

My toff rented his London house, car, furniture

from a Channel Islands post-box company

. In other words, from HIMSELF. But the 3 Island lawyers registered as the post-box owners would never divulge this, of course. His salary - much lower than his real one - was paid by another post-box, his shares by another. And his expense account paid for their food and petrol and travel.

That means you, the taxpayer, paid his bills!

These people live the life of Riley for FREE! YOU pay it! Why do you think most MP's have seats on various boards, they are paid to see to it the tax laws are advantageous to 'their friends' (as for themselves, need I say that?)

We workers don't earn enough to pay an accountant/lawyer to do this for us.

http://news.sky.com/...rticle/16072053

Edited September 18, 2011 by erranta

[geezer466]

Maybe this new army of tax inspectors will have direct access to the data at the Land Registry and correlate it against who has BTL mortgages.....

Got to be a few quid in that and they did say some time ago they would be cracking down in this area. Its looks like an easy revenue generator for not too much chasing around. I am pretty sure software can be written to interrogate the lists of BTL loans against who owns what at the LR and what those individuals tax returns say........

Much more money in doing this I reckon than chasing a few fat cats with good accountants...

The vast majority of amateur BTL will not even be aware they should be paying tax on rental profits......

[winkie]

I think the idea is to:

1. Clamp down on evasion, which is illegal.

2. Investigate avoidance, and legislate or change guidance to close loopholes that are seen as revenue generators.

Makes sense.

[LJAR]

I was once told by a 'toff' that if all companies in GB paid the corporation tax then theoretically personal income tax could be abolished for all wage-earners. And the govt would have more money in the kitty than via personal income tax.

If they did that then everybody's salary would drop and all the prices would rise to cover the loss of profits to comanies.

Profits are GOOD thing dammit, they are where our wages come from, where our savings and investment (ha!) come from,

Big profits signal tat more people should get into that business and increase competition and so bring down prices.

I would much rather that profits were distributed to private individuals than to government agencies.

[Democorruptcy]

Irish racehorse trainer in the news. Interest and penalties nearly double the tax amount!

It relates to money earned from 2000 to 2002 and the fact that when it was repatriated to Ireland in 2003 and corporation tax paid on it, the corporation tax was lower than it would have been in 2000 to 2002.

CHAMPION trainer Aidan O'Brien has made a tax settlement of more than half a million euros to Ireland's Revenue Commissioners.

The settlement of €526,077 was made for underdeclaration of corporation tax, PAYE and PRSI following the Revenue's offshore assets investigation. It included unpaid tax of €177,639.85 and interest and penalties of €348,437.34.

The payment was made under the name of Whisperview Trading Ltd, which is O'Brien and his wife Annemarie's breeding operation.

[jonb]

Telegraph article here

In summary

"Wealthy individuals who are avoiding the 50p income tax rate are to be targeted by 2,250 extra Government inspectors in a crackdown to be unveiled by Danny Alexander at the Liberal Democrat conference. "

When did tax avoidance become illegal? Tax evasion is, I understrand that. But when did it become OK to make judgements as to avoidance becoming illegal. If it is then why aren't we also 'investigating' second home owners and landlords too. These are ways to 'avoid' paying taxes on savings and earnings just as much as the rich avoiding taxes.

Or have the Telegraph used the wrong words and mean Tax Evasion?

They can target avoidance by finding out exactly how they are legally avoiding paying the tax so they can change the rules to stop it.

They can also check exactly how they jumped through the loophole to make sure they did it correctly. The slightest error can make the strategy ineffective and mean the tax is due, usually together with interest and penalties.

[jonb]

Maybe this new army of tax inspectors will have direct access to the data at the Land Registry and correlate it against who has BTL mortgages.....

Got to be a few quid in that and they did say some time ago they would be cracking down in this area. Its looks like an easy revenue generator for not too much chasing around. I am pretty sure software can be written to interrogate the lists of BTL loans against who owns what at the LR and what those individuals tax returns say........

Much more money in doing this I reckon than chasing a few fat cats with good accountants...

The vast majority of amateur BTL will not even be aware they should be paying tax on rental profits......

The vast majority of amateur BTL aren't making any rental profits, at least they weren't until about 2 years ago when interest rates fell to near zero.

[winkie]

If they did that then everybody's salary would drop and all the prices would rise to cover the loss of profits to comanies.

Profits are GOOD thing dammit, they are where our wages come from, where our savings and investment (ha!) come from,

Big profits signal tat more people should get into that business and increase competition and so bring down prices.

I would much rather that profits were distributed to private individuals than to government agencies.

So would I........I would rather the low paid kept more of their earned money.... their fuel bills were not top loaded with tax on top, that their small savings were tax free, that the higher proportion of their wages goes on vat duty and council tax etc........I would prefer that they were not taxed to the hilt to have to then claim back the tax they have already paid as credits and other benefits via all manner of hoops, jumps and hurdles.......whilst the ultra rich can hide what they earn and easily avoid paying a fairer proportion....the rich and powerful try to use threats and money to try to influence the decision makers.....it takes a good, fair and honest politician to not be easily led when they know what is right and what is wrong for the majority who more often than not end up holding the short straws.

[StainlessSteelCat]

If they did that then everybody's salary would drop and all the prices would rise to cover the loss of profits to comanies.

Profits are GOOD thing dammit, they are where our wages come from, where our savings and investment (ha!) come from,

Big profits signal tat more people should get into that business and increase competition and so bring down prices.

I would much rather that profits were distributed to private individuals than to government agencies.

I agree. I wonder how I can set up a bank so I can enjoy the same lifestyle as our banker friends?

[ChumpusRex]

They can target avoidance by finding out exactly how they are legally avoiding paying the tax so they can change the rules to stop it.

They don't have to check any more.

The law was changed a few years back. If any person (or their accountant) plans to put in place a scheme to reduce their tax bill, which is anything other than a bog standard normal business practice, they are required to declare the scheme in all its details, to HMRC before actually putting the plan into practice.

In other words, if you find a tax-loophole, you must first explain its operation to HMRC before you, yourself can take advantage of it. If you fail to declare the scheme to HMRC before its incept, then you remain liable for any tax that the scheme avoided (even if the scheme is otherwise completely legal).

Edited September 18, 2011 by ChumpusRex

[Superted187]

So does this mean, that in previous years if you were being naughty and got caught, you were just unlucky?

Hiring 2000 + more employees must mean that its always been a massive problem, but they only really went after the worst offenders

[The Ayatollah Buggeri]

In other words, if you find a tax-loophole, you must first explain its operation to HMRC before you, yourself can take advantage of it. If you fail to declare the scheme to HMRC before its incept, then you remain liable for any tax that the scheme avoided (even if the scheme is otherwise completely legal).

That is simply unenforceable. The defence: 'Loophole? Scheme? What loophole or scheme? I am simply organising my tax affairs in compliance with the law as it currently stands'.

[winkie]

So does this mean, that in previous years if you were being naughty and got caught, you were just unlucky?

Hiring 2000 + more employees must mean that its always been a massive problem, but they only really went after the worst offenders

It is like going after the easy targets, the PAYE for example or to put it another way like collecting easy taxes from the car drivers through parking violations and speeding tickets.

[Superted187]

It is like going after the easy targets, the PAYE for example or to put it another way like collecting easy taxes from the car drivers through parking violations and speeding tickets.

This is what I'm thinking... so now they are going after the targets where someone might actually need to do some maths.

On the PAYE note - the company I work for (small company - 30 employees) had a PAYE inspection at the start of the year. Everything was all onboard but they demanded to know where all of the petty cash went.

We told them where - and one of them was the cleaner. He's a retired old boy that cleans the offices in our building for some pocket money to fund his car restoration hobby. They demanded his number. He'll be getting paid a few quid a week to clean our bogs, and the taxman is going to rattle his cage!!

I suppose it's easy to go after the guy that can't afford the creative accountant.

[porca misèria]

They don't have to check any more.

The law was changed a few years back. If any person (or their accountant) plans to put in place a scheme to reduce their tax bill, which is anything other than a bog standard normal business practice, they are required to declare the scheme in all its details, to HMRC before actually putting the plan into practice.

In other words, if you find a tax-loophole, you must first explain its operation to HMRC before you, yourself can take advantage of it. If you fail to declare the scheme to HMRC before its incept, then you remain liable for any tax that the scheme avoided (even if the scheme is otherwise completely legal).

Methinks this can't be the whole story.

I use several tax-avoidance schemes: Dividends, Pension contributions, VCT investments, Charitable contributions, and ISAs. It would be perverse for me to try and explain any of those to HMRC.

[porca misèria]

The new Greek property tax is going to be collected via electricity bills. If you don't pay up you get cut off. Sounds like quite a good idea.

Cost of generator vs cost of tax?

[porca misèria]

So does this mean, that in previous years if you were being naughty and got caught, you were just unlucky?

Hiring 2000 + more employees must mean that its always been a massive problem, but they only really went after the worst offenders

Seems plausible. There's always a tradeoff between enforcement costs and what you get out of it. Same as with benefit cheats.

And if they've been standing still for a long time, there'll be a buildup of 'common practice' to go after. Things along the lines of parliamentary expenses.

[jonb]

Methinks this can't be the whole story.

I use several tax-avoidance schemes: Dividends, Pension contributions, VCT investments, Charitable contributions, and ISAs. It would be perverse for me to try and explain any of those to HMRC.

Those, with the exception of dividends, are specifically excluded from disclosure. The providers have to register with HMRC or the Charity Commission/Scottish Charity Regulator where appropriate to get the tax exempt status. Normal dividends are fine, but when you start doing dividend waivers or alphabet shares you can run into problems.

One scheme I've seen recently, which is the sort of thing HMRC will be targeting is advertised to work as follows:

Company pays money money to an offshore trust. Trust buys gold with the money and sells it to the director. The director is not required to pay for the gold immediately, but can pay for it whenever he feels like it. Director sells the gold, or rather the trust sells it on his behalf, then he gets to keep the proceeds of the sale. I'm not convinced this will work and HMRC will look very closely at the steps they take, and possibly the actual nature of the gold bought and sold.