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HMRC 'briefing' Osborne

I note in the news today that "Ostrich" Osborne is "shocked" that the wealthiest individuals in the UK only pay a marginal rate of tax of about 10%, he having been plied with anonymised tax returns of some of our wealthiest by HMRC.  Leaving aside how "shocked" I am that this comes as a surprise to him, I would be interested to know whether he or his department asked for this information or, on the other hand, whether HMRC decided unprompted to volunteer it.  The wording in the news suggests the latter, although it is not conclusive.  But if so, it begs the question, what business is it of HMRC to draw Osborne's specific attention to the fact that a handful of citizens are paying the "right amount of tax" according to the laws that they, as civil servants, have been instructed to implement by their political masters?  Or does HMRC in reality have a secret political agenda to maximise the revenue collected, despite its repeated reassurances to the public that it is only interested in collecting the right amount of tax?

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10th Apr 2012 11:35

I suspect he asked for the info

Mark

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10th Apr 2012 13:39

On the contrary

I think if HMRC have information which they know the cabinet will find interesting, then I would hope that they would volunteer it.  It is a government department, you would expect the government departments to assist the government to run the country effectively.  It doesn't make them political....

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10th Apr 2012 13:51

This came up from an HM Treasury request

This was in relation to a document on proposals for a "tycoon tax" that was raised internally by the Treasury.

They asked HMRC's High Net Worth unit for guidance on what was the actual marginal rate of tax being paid by the country's wealthiest taxpayers.

Initially the HNWU was unable to comply due to concerns over data protection and privacy of this group (largely due to their sensitive and litigious nature), but they realised that the only way to reasonably answer the enquiry without putting themselves in the hot seat about WHY the wealthiest paid such modest marginal rates of tax was to provide copies of returns with all personal details redacted and including a summary note on each return showing the marginal rate calculated and a commentary where the marginal rate was 'substantially lower than expected'.

So this is not HMRC's political wing or even the PR department, it is a very serious part of HMRC's operations answering a question raised by HM Treasury in relation to the future tax policy of HM Government.

I believe everyone in this is doing their jobs correctly.

I have to admit some cynicism about the Chancellor being "shocked" about the findings - I suspect that this is for political image only - however as politics is his job then we can't really complain.

All of this comes down to the very complexity of the tax code providing numerous opportunities for the wealthy to employ highly paid tax advisers to legitimately avoid (not evade - well, probably not evade) taxes.

I don't know what the Chancellor will do about these findings, but plainly the Office of Tax Simplification has to pull their socks up and get cracking as they have done precious little thus far (nearly 2-years into government).

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10th Apr 2012 14:04

Do the government really want to change this situation?

After all ... the high net worth individuals are the ones with the most influence, but it does make the reduction of the 50% tax rate look heavily biased.

This is where I find a coalition government to be very interesting, as one party will always publicise the excesses of the other party in an effort to get a little more support for their own party.

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10th Apr 2012 17:54

The abuse of charities sounds more like money laundering...

ShirleyM wrote:

After all ... the high net worth individuals are the ones with the most influence, but it does make the reduction of the 50% tax rate look heavily biased.

This is where I find a coalition government to be very interesting, as one party will always publicise the excesses of the other party in an effort to get a little more support for their own party.

I doubt very much that the taxpayers subject to the HNWU's scrutiny would have that much income subject to PAYE that the 50% rate would be relevant. Maybe some of the senior executives of the large institutions, but the majority of them would have substantial controlling interests with the ability to redirect / defer income so that they are not subject to the 50% PAYE rate (+Employees NI +Employers NI).

These are the 5,000 top earners in the UK, so they are probably more interested in issues affecting their ability to make money from capital gains than anything else.

I think the biggest revelation is that HMRC will allow deduction for charities where money is sent abroad, but the charity is secretly controlled by the UK taxpayer or his corrupt appointees / trustees.

Where money is being transferred to 3rd world countries disguised as charitable donations I would expect this is very difficult to prove, even with the assistance of the Charity Commissioners (one of the most useless and politically driven organisations in the UK).

No doubt there is some EU directive which prevents us from saying "only UK based charities with independently audited accounts will be deemed acceptable for UK tax deductions".

Suddenly thinking about starting a charity for poor, orphaned accountants trapped by dreadful circumstances in Tuscany. The agony and suffering will be unbelievable (and I mean that most sincerely folks).

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