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Odd Article In The Telegraph

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So "political pressure" is causing HMRC to take too many cases to court / tribunal. Which is <TeenageStrop>soo unfair!</TeenageStrop>

http://www.telegraph.co.uk/finance/personalfinance/capital-gains-tax/10191636/Political-pressure-adds-to-backlogs-at-HMRC.html

The tax authority is currently straining to deal with more than 40,000 cases of what it sees as “aggressive” tax avoidance, with experts warning that a “Margaret Hodge effect” is adding to delays in cases being resolved by piling political pressure on HMRC not to take the “practical approach” of negotiating settlements.
He suggested the tax authority could begin to clear the delays by giving individuals and businesses the “opportunity to come in and settle where there is a tangible discount on the table”.

Why give a discount? I suppose HMRC could lose in court:

HMRC said it is winning over 80pc of the cases that go to court

Maybe not.

I look forward to the next telegraph article where they look at other crimes and say "political pressure" is causing the CPS to actually charge thieves and drug dealers* whereas if they just came to a mutual agreement the situation could all be sorted out amicably.

*Yes i know tax avoidance isn't a crime. Except that in 80% of cases HMRC win: which mean the perp thought it was tax avoidance but actually it's tax evasion.

Edited by gadget

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So "political pressure" is causing HMRC to take too many causes to court / tribunal. Which is <TeenageStrop>soo unfair!</TeenageStrop>

http://www.telegraph.co.uk/finance/personalfinance/capital-gains-tax/10191636/Political-pressure-adds-to-backlogs-at-HMRC.html

Why give a discount? I suppose HMRC could lose in court:

Maybe not.

I look forward to the next telegraph article where they look at other crimes and say "political pressure" is causing the CPS to actually charge thieves and drug dealers* whereas if they just came to a mutual agreement the situation could all be sorted out amicably.

*Yes i know tax avoidance isn't a crime. Except that in 80% of cases HMRC win: which mean the perp thought it was tax avoidance but actually it's tax evasion.

I don't see the problem. The tax avoider gets their day in court so they are hardly being subjected to arbitrary rulings by HMRC. If they lose then they have to cough up what's due and so should all the others who are part of the scheme. The delays are neither here nor there since the only impact on the losing taxpayer is the interest that accumulates on the tax paid late. Otherwise they still have the use of the money. If the accountants want discounts they need to start negotiating before schemes are voided by the courts. Maybe the legal and accountancy firms who come up with these dodges are worried the won't get paid when it all goes tits up.

In the old days of 83% top rate tax I had some sympathy with people trying to negotiate down their bills but since the rich now only pay 5% more tax at top rate than I do in a good year I am not about to shed any tears for them.

Edited by stormymonday_2011

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Why give a discount?

The problem is that many tax rules are highly subjective and the trend in recent years if for ever more subjectivity and grey areas. Wording such as "can be reasonably attributed to" is quite common. This has created the situation where the amount of tax you pay can vary wild due to slightly differing interpretation of imprecisely written "rules". HMRCs primary tax collection methodology is to apply the most favourable (to HMRC) possible interpretation and then intimidate the small business/individual into compliance.

So in essence there has been a (deliberate IMO) policy to make the rules more complex vague in order to allow them to over-collect. However this has largely backfired because of the internet and the access it provides to real information about what they can make stick and what they cant, and there are now so many grey areas in the rules that its much harder for them to make anything stick should it actually get as far as a tribunal or court case.

Edited by goldbug9999

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The problem is that many tax rules are highly subjective and the trend in recent years if for ever more subjectivity. This has created the situation where the amount of tax you pay can vary wild due to slightly differing interpretation of the "rules". HMRCs primary tax collection methodology is to apply interpretation most favourable possible interpretation to them and then intimidate the small business/individual into compliance. Obviously these tactics don't work so well against large corporates and high net worth individuals with the resources to take them on in the courts.

So in essence there has been a (deliberate IMO) policy to make the rules more complex vague in order to allow them to over-collect. However this has largely backfired because of the internet and the access it provides to real information about what they can make stick and what they cant, and there are now so many grey areas in the rules that its much harder for them to make anything stick should it actually get as far as a tribunal or court case.

The 'rules' are being interpreted by a judge not by HMRC. At the end of the day the losing party is probably only going to be paying 5p in the pound more tax at the marginal rate than many ordinary middle tanking PAYE employees. The truth is if the rules were simple and everyone paid a flat rate 20% rate of income tax these people would still seek to avoid it. They are happy for the 'little people' to pay tax particularly if they are in a business that gets a rake off from the state but they think its an insult to pay it themselves.

Edited by stormymonday_2011

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The 'rules' are being interpreted by a judge not by HMRC. At the end of the day the losing party is probably only going to be paying 5p in the pound more tax at the marginal rate than many ordinary middle tanking PAYE employees. The truth is if the rules were simple and everyone paid a flat rate 20% rate of income tax these people would still seek to avoid it. They are happy for the 'little people' to pay tax particularly if they are in a business that gets a rake off from the state but they think its an insult to pay it themselves.]

Wrong. So wrong. In HK the tax rate is 12% for most, 17% tops, and NO ONE tries to game it. Why? A very simple tax regime that take minutes to fill out, a simple investigation and penalty regime which follows up on discrepencies, and a good press base which slaughters rich individuals who game the system (look at the coverage of illegal extensions to high end properties - would never evene be covered in the british press if richard branson extended 5mm over the permitted size for his conservatory).

So - make the system simple, police it fairly, have a low tax rate, and people don't see the benefit in cheating. Make the tax rate high, make it complex, and create a low probability of being investigated, and hey presto people try it on. It's not rocket science.

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The 'rules' are being interpreted by a judge not by HMRC. At the end of the day the losing party is probably only going to be paying 5p in the pound more tax at the marginal rate than many ordinary middle tanking PAYE employees. The truth is if the rules were simple and everyone paid a flat rate 20% rate of income tax these people would still seek to avoid it. They are happy for the 'little people' to pay tax particularly if they are in a business that gets a rake off from the state but they think its an insult to pay it themselves.]

Wrong. So wrong. In HK the tax rate is 12% for most, 17% tops, and NO ONE tries to game it. Why? A very simple tax regime that take minutes to fill out, a simple investigation and penalty regime which follows up on discrepencies, and a good press base which slaughters rich individuals who game the system (look at the coverage of illegal extensions to high end properties - would never evene be covered in the british press if richard branson extended 5mm over the permitted size for his conservatory).

So - make the system simple, police it fairly, have a low tax rate, and people don't see the benefit in cheating. Make the tax rate high, make it complex, and create a low probability of being investigated, and hey presto people try it on. It's not rocket science.

I agree with your sentiment but your fact about HK is wrong.

Just like most people in the UK, most people pay taxes according to the rules because they don't have the energy to try to avoid it. The last time I checked I think HWL has an average tax bill of about 10% of reported profit rather than 17%...

While lower tax rates lead to less avoidance/evasion, only 0% tax eliminate them all..

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Who cares about income tax? It's the tax avoidance by other means (e.g. dividends) that is probably taking up the time.

Dividend is income.

There are basically 2 types of direct taxes that a person suffers - capital gain (not sure why they even bother as capital gain is really income), and income tax. Capital gain is the type of money that you get watching stuffs go up in prices as more money are printed and interest rates are cut to zero or lower.

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There are basically 2 types of direct taxes that a person suffers - capital gain (not sure why they even bother as capital gain is really income), and income tax. Capital gain is the type of money that you get watching stuffs go up in prices as more money are printed and interest rates are cut to zero or lower.

Rich people make most of their money from capital gains. The rest make most of their money from income. By taxing income at a much higher rate than capital gains, you prevent the poor and middle-class from building up enough capital to become rich and compete with their betters.

The funny part is that the left have got the poor to demand increases in the very tax that ensures they'll never be rich.

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Dividend is income.

There are basically 2 types of direct taxes that a person suffers - capital gain (not sure why they even bother as capital gain is really income), and income tax. Capital gain is the type of money that you get watching stuffs go up in prices as more money are printed and interest rates are cut to zero or lower.

:o:o:huh::D

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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