#AceFinanceNews – LONDON – HMRC – April 12 – According to the article in the BBC News today George Osborne is intending to clamp down on tax dodgers or people with overseas bank accounts.
My first question does this include the tax authorities and MP’s that have companies, shareholdings or private trusts in offshore domains?
Or just as he put it only people who hide their money overseas to avoid paying tax.
His plan is that they will face bigger fines and could be jailed more easily under government plans to fight tax evasion, but no mention of tax avoidance (A legitimate way for those who are rich enough to AVOID) taxation. All in the name of business be it investment, reinvestment or company and corporate liability strategy.
He went onto say he intends to prosecute but at present, tax officials must prove a person holding income offshore has intended to evade tax.
Once again avoiding tax is not mentioned.
He continues – But under a new criminal standard officials would only have to show money was taxable and undeclared.
An onerous statement to say the least.
As no one would have to prove they owe it as according to HMRC Officials, they say under their new rules you do!
I imagine human rights organisations will have something to say about that change.
He then says – The changes would mean there was “no safe haven” for those evading tax.
No mention of not avoiding, once again.
But Labour’s shadow exchequer secretary to the Treasury said the government was “failing to tackle tax avoidance and evasion”.
A consultation will be held to let the public have their say on the plans.
Should you care to read his article it is at http://www.bbc.co.uk/news/uk-politics-26998208
HM Revenue & Customs (Photo credit: jam_90s)
A statement from The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts:
People who pay their taxes promptly and in full will be dismayed to discover that the enormous level of tax avoidance taking place is overwhelming HMRC’s efforts to combat it. The scale of the problem is staggering. There are tens of thousands of users of mass-marketed avoidance schemes in the UK. HMRC estimates that over £10 billion of tax is at risk owing to individuals and small businesses avoiding paying money that is due.
Between 2004 and 2011, around 2,300 avoidance schemes were disclosed to HMRC, with over 100 new schemes emerging in the past four years. Until tested in court, I am dismayed that these schemes will continue to reap rewards for individual users at the cost of the public purse. This is particularly galling at a time of pinched resources affecting essential services.
HMRC is struggling to understand what impact its anti-avoidance activities are having. It is overcome by an eye-watering 41,000 open cases of which over 5,000 have sat unresolved for between five and ten years. My concern is that without a credible plan to resolve these cases and to stamp out future avoidance, the public will lose confidence in the tax system’s ability to collect even-handedly what is due from all individuals and companies.
HMRC must step up its enforcement activity to clamp down on promoters of schemes who fail to disclose properly. The DOTAS reporting regime is quickening HMRC’s action against avoidance schemes. But HMRC is constantly playing catch-up as new schemes open up. Fines are being applied in far too few cases to serve as a meaningful deterrent. HMRC needs a robust plan to tackle its mountain of open cases. It needs to start collecting the right information to demonstrate to the public that its anti-avoidance approach works as well as is possible. HMRC should also use this information to press the case for how future tax yields can be improved with appropriate levels of trained staff.
for the List of offshore financial centres (Photo credit: Wikipedia)
So what is tax avoidance and what is tax evasion?
KEY FINDINGS –
Overall Size – A significant fraction of global private financial wealth — by our estimates, at least $21 to $32 trillion as of 2010 — has been invested virtually tax-free through the world’s still expanding black hole of more than 80 “offshore” secrecy jurisdictions. We believe this range to be conservative, for reasons discussed below.Remember: this is just financial wealth. A big share of the real estate, yachts,racehorses, gold bricks — and many other things that count as non-financial wealth are also owned via offshore structures where it is impossible to identify the owners.These are outside the scope of this report.
On this scale, this “offshore economy” is large enough to have a major impact on estimates of inequality of wealth and income; on estimates of national income and debt ratios; and – most importantly – to have very significant negative impacts on the domestic tax bases of key “source” countries (that is, countries that have seen net unrecorded private capital outflows over time
A simple question most people would say, but look at the reality of what it really means and it is not such a simple question after all!
The problem is simply what is tax evasion and what is tax avoidance and in this world of global financial contracts, the two blur into one. As and having worked in this country and offshore with my own offshore company and account, l personally do not see any reason to avoid paying tax!
As any accountant l employed had the job of mitigating my tax bill in favour of saving me money and allowing me to pay only what l really should owe! This is legitimate tax avoidance and is completely allowable!
Then we come to avoiding taxation by paying nothing at all and setting up offshore tax structures in such a way as to legitimise all tax avoidance! Whereby you have all the perks of claiming in the country of residency, but also can arrange to domicile yourself,by certain tax avoidance schemes and not paying anything!
So we have two different scenarios and the reason is tax avoidance!
So what of governments and revenue services where do they hold their funds? Well many of them have tax havens and massive property portfolios that are utilised for raising massive amounts of capital for investment purposes and make even more money, to totally avoid tax at all!
Remember anyone can use legitimate means transfer money to another account offshore without paying tax! The problem is getting that money back into the country and not paying tax!
This is where tax avoidance becomes tax evasion in many cases!
Secret denunciations against anyone who will conceal favors and services or will collude to hide the true revenue from them. (Photo credit: Wikipedia)
Morality (Photo credit: tdietmut)
CASH IN HAND –
Has been around for longer than l can remember it goes back to before the use of currency as we know it came into being! So long ago a number of people using goods and chattels provided us with a way to barter, such as a handyman provides a service and gets paid by receiving payment in kind!
I worked with a man called Steve Adams [RIP] he was a craftsman plumber by trade and he received payment in different forms, from a bottle of whiskey, step-ladder and even a car! These people from local politicians through to the man or woman in the street were paid this way,for many a year. it was simply called ” Payment or Benefit in Kind”
This like so many ways to not pay tax sooner rather than later were to become know as ” Tax Avoidance” and a rule in the 80’s was coined as ” Benefit In Kind ” for using a vehicle in business or receiving a so-called benefit or as it came to be known a ” Bung” but was this really tax avoidance.
The fact that Cameron came out with the statement that they would clamp down on tax avoidance schemes led some to believe he meant the businesses and banks! Of course the more cynical of us and l am one realised it would mean the ordinary working man or woman.
The fact that the person put in charge has been in charge of showing people how to avoid tax in the past! Does this make him the right person to morally judge us? This extract thanks to Wikipedia shows he had expertise in ” Tax and Structuring ” tells us he was advising people on ” Tax Avoidance Schemes”
He was a researcher to the Conservative MP for Milton Keynes South West Barry Legg in 1993. He worked as a trainee solicitor with Richards Butler from 1995, being admitted as asolicitor in 1997. From 1999 to 2005, he was a solicitor in the financial services group atMacFarlane, a corporate law firm with expertise in “tax and structuring”.
David Gauke didn’t find many supporters for his view that paying tradesmen cash in hand was “immoral” yesterday. Dave, Nick, Ed Miliband and Boris all lined up to say they’ve done it before.
We’ve got a feature by Dan Hodgescalling the affair “another attack on the middle classes” ; he warns politicians about the hazards of moralising on tax.
So what is morally justified in this world of financial jiggery-pokery http://www.thefreedictionary.com/jiggery-pokery who can give us advice on what we should consider is tax avoidance or just a way to avoid paying our ” just desserts”
Well my answer is that as long as you provide a good service at the right price and submit your tax forms to the appropriate authorities on time, you do the right thing! By using the rules and regulations set down by the HMRC and keeping within them you can utilise legitimate tax avoidance by not paying more than you really have to and keeping yourself, family and tax man firmly on the other side of your front door. As once they have a foothold they will not let go until they drain the life blood from your bank account and provide it to the ” True Avoider’s of this World” the people who made the rules up in the first place!