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Tax avoidance momentum heads for tipping point . Is it the beginning of the end ?

23rd Jul 2012
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Each day a new headline or report about "the rich" and tax avoidance schemes. I see similarity with the "Arab Spring" where it starts out with a few stones being thrown and ends up with a new regime , with or without carnage en route.  We are in a new economic order now and it is fashionable to castigate those using legal methods to mitigate their tax. Either people have to accept that it is legal or agitate for a change in the law.

I know which one my money is on ! But what do those in the business of peddling these schemes think ? Are they hanging up their ledgers  and heading for the sun  or rubbing their hands together at the prospect of dispensing yet more advice as the rules change ?

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By ShirleyM
23rd Jul 2012 09:27

Fashionable?

I think it is more likely that the general public are really feeling the squeeze, and as the majority of the general public are in employment  and earning well under the 'average' wage, and they are unhappy about the top earners paying just 1% tax.

I doubt it is anything to do with being 'fashionable' and more likely that they realise that tax has to be paid by someone, and the less one person pays then the more tax others must pay. I think the same people would be just as upset if their employed colleague on an average wage was just paying 1% tax, too.

This is just a PR stunt. We will maybe get one or two sacrifical lambs, but nothing more.

We have put foxes in charge of the chickens!

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By justsotax
23rd Jul 2012 09:29

Whilst i don't necessarily 'peddle'

the more questionable schemes (with the caveat that 'legal' is not the same as 'unchallenged')...i have contact with the guys higher up the chain, and after the last budget they called me to advise that they had had to review the schemes they had in place and were happy to say that in place of the 7 schemes they had....they now had 6.

 

I fear that whilst there is money there will be these schemes, no matter what the public perception.  (see Mr Loophole and his loyalty to those reckless (and generally wealthy) drivers who he get's off because the officer was picking his nose whilst holding the speed gun, or that he hadn't signed in the right place when handing over the ticket....)

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By Roland195
23rd Jul 2012 10:59

Mr Loophole

In the example of Mr Loophole, I have read various statements where he claims that he offers a valuable service to the community, where by demanding a higher standard from the police that will benefit society as a whole. I do not believe for one minute that the little weasel actually believes this tripe but then if he has a hole where his conscience should be then he is far from the only one.

 

 

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Norman Younger
By Norman Younger
23rd Jul 2012 11:05

Loopholes

I am a great beleiver in utilising loopholes. The reason ? Simples ! You can bet your bottom dollar that that when the equivalent of a loophole is in favour of the authorities , say for example "a technicality" , then they will punish the taxpayer / offender and make their life hell . I speak from personal experience of how unjust and biased the application of regulations is. So, what goes around comes around....

 

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By justsotax
23rd Jul 2012 11:17

maybe.....but i wonder if you

would think differently if the driver you have just got off a speeding charge (which he admits to....lets say doing 50 in a 30)....then proceeds to knock over and seriously injure your child due to speeding....!?

 

I am not saying the authorities don't use technicalities to their own benefit but in Loopholes cases, the majority have admitted to the offence but the procedure then hasn't been followed.  At least the potential with a late tax return, tax liability, parking ticket etc isn't life threatening....

 

 

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Replying to Portia Nina Levin:
Norman Younger
By Norman Younger
23rd Jul 2012 13:43

Loopholes

I suspect that in your example since an accident occurred the driver would have no way out on the speeding because it was no longer a speeding case. I am not of course advocating that loopholes are created but as they do exist and as the state will readily use it against you is it not equitable to do the same to the state ? I hope you never have to face down the state because they will stoop as low as necessary and stop at nothing

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By ShirleyM
23rd Jul 2012 11:50

Utilising loopholes costs the taxpayers vast amounts of money

Use of loopholes costs the country money ...

yet MORE legislation to close themcourt costs incurred on both sideswasted time on both sidesprobably lots more costs involved (when I get chance to think of them)

Anyone using loopholes (for whatever reason) should not complain about the massive amount of legislation as this is the reason we have so much legislation in the first place. It is a never ending circle.

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By justsotax
23rd Jul 2012 11:59

and they shouldn't complain when

they don't get the services they want (police turning up within mins of a 999 call, bin collection weekly etc)....

 

So if Bob Geldof would like me to contribute towards his no doubt large wages for working for a charity then if he can show me a way of reducing my tax to 1% legitimately then i would be happy to send him a cheque.  But until then stop moaning that we don't give enough....!!! 

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Replying to Manchester_man:
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By Roland195
23rd Jul 2012 12:46

Exactly

justsotax wrote:

they don't get the services they want (police turning up within mins of a 999 call, bin collection weekly etc)....

 

So if Bob Geldof would like me to contribute towards his no doubt large wages for working for a charity then if he can show me a way of reducing my tax to 1% legitimately then i would be happy to send him a cheque.  But until then stop moaning that we don't give enough....!!! 

The same logic should be applied to the tax exiles who after not paying a bean to the UK exchequer in years will still expect a seat on a helicopter to get them out when the the locals of the state they do reside in revolt. .

 

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By ShirleyM
23rd Jul 2012 13:26

@Roland

... or they return to the UK when they discover they need a £50K heart operation!

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By justsotax
23rd Jul 2012 13:34

yeah funny that isn't it....

and you would think they would be happy to stay outside of the NHS rather than 'slum it' (until that is they are in ill health and find that the premiums they will have to pay amount to the GDP of a small country.....)

 

 

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By justsotax
23rd Jul 2012 13:48

although the whole idea of

handing out speeding tickets and giving points is to give the driver warning about their driving behaviour....if he has run down a kid having previously 'got off' then i am not sure i would sleep better at night knowing that he now has no loophole to get off....(although see the case about the failed asylum seeker...)

 

Obviously i don't know your situation....but two wrongs don't make a right.....

 

 

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By ShirleyM
23rd Jul 2012 14:11

I agree with @Justsotax

" ..... but as they do exist and as the state will readily use it against you is it not equitable to do the same to the state  ...."

That sort of reasoning is the politics of envy. It seems you are saying 'he (or they) can do it (use loopholes), so I will too'??

That is why we go round and round in circles. Someone, somewhere, has to stop the merry go round.

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Norman Younger
By Norman Younger
23rd Jul 2012 16:49

The merry go round

I wouldn't describe it as policitcs of envy, as loopholes in the law are availabel to all. I have a good track record on parking ticket appeals wihtout resorting to fancy soliciotrs , just by using common sense, somethign that is in short supply with contracted-out parking attendants.

As for the merry go round , regrettably thus is life . Surely you don't advocate a one sided situation where the state hangs you out to dry  but you have no recourse when you have a chance to get your own back ?

The only way to stop this is to eliminate loopholes. But when is a loophole not a loophole ? If you are stopped for speeding are you not entitled to check that the laser gun has been calibrated properly ? And when you find out that it was not , then the rules have not been adhered to. Loophole or not ? 

 

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By ShirleyM
23rd Jul 2012 17:00

Common sense

I try to think of the overall consequences, and not just my personal situation.

If everyone paid 1% tax, because everyone had jumped on the same merry-go-round, then the country could well go bankrupt, and it wouldn't be a very nice place to live or work.

If everyone caught for speeding wanted confirmation that the laser gun had been calibrated correctly, then it is hardly going to bankrupt the country or cause riots throughout the land.

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By justsotax
23rd Jul 2012 17:13

laser gun loophole...

maybe...does it make it right....not really sure it does, i suspect that in the majority of cases we are not talking about a gun that would have given a figure of 60mph when you were only doing 30.  Indeed  loophole tried to appeal the other day against a charge where the guy had admitted to driving at 115mph but due to a police 'error' had appealed against other charges relating to the offence.  Like i say if Mr Loophole himself can live with the fact that potentially in the future one of his reckless clients will again speed and potentially kill someone then so be it, not something that sits comfortably with me.

 

As for loopholes in general....well they tend to be more about what the law doesn't say rather than what it does.....and given the fact that government finds it hard enough to apply the explicit laws then i struggle with the concept of government charging me with offences due to a 'loophole'.  

 

(getting a parking ticket from a machine that is out by a few mins compared to the local townhall clock is one thing.....appealing on that basis when you have left the car for an hour too long is another.....technically the machine hasn't stamped the right time.....but makes no material difference to the facts).

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Norman Younger
By Norman Younger
24th Jul 2012 11:40

Loopholes

It looks like a moral call , bit like paying cash to the plumber. Now , how many of you consider THAT to be a loophole as technically it is the tradesman's job to declare it

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By ShirleyM
24th Jul 2012 14:48

Paying cash for anything

Cash payments are not morally wrong. 

It is paying cash in the knowledge (or encouragement) that the recipient will not be declaring it that is morally wrong (and probably illegal, too).

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Norman Younger
By Norman Younger
24th Jul 2012 15:42

Cash

So when Johnny the builder offers you 15% less for cash do you assume he is on the fiddle OR perhaps he is overdrawn at the bank and if he puts in a cheque he'll never see the money and have nothing to use for the weekly shopping ? Perhaps he owes money to a loan shark and if cash isn't delivered in the next hour it's curtains for him

You can hardly ask him why he wants cash because it could be terribly embarrassing for him . The discount is to entice you to co-operate without questions.

It's bizarre that in the drive towards a cashless society ATMs are popping up all over. In the past 6 months it's gone from 1 to 3 within 50 yards of my office window. And the Bank of England is encouraging more fivers in them. So what place does cash have in the moral high ground that we now find ourself perched on. 

 

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By justsotax
24th Jul 2012 16:42

Hmmm....youy maybe right....

but i fear the difference between the two is a few billion.....context is everything......break the speed limit by a couple of miles...ok ?....(the majority do it....of course doesn't make it right), go 50 in a 30....probably endangering lives.

 

Mr Plumber takes cash for a several jobs over the year....worth say £2,000.....saves max £400-600 (assuming that is he has claimed all of his expenses which invariably he doesn't)....oh and the cash gets spent locally.

 

Mr Carr.....enters into an arrangement whose only aim is to avoid tax (legal....well so far)......saves £100,000s.........where does the money go.....who knows.....to buy a property off a a non dom who needs to leave the country to avoid tax....

 

I am quite happy with my moral stance.....what i don't appreciate is having the 'moral' argument made by an MP of all people.....one who probably lunched with Vodafone last week....

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Norman Younger
By Norman Younger
25th Jul 2012 08:55

Spending tax savings

Can't say I disagree with where you are coming from. It seems that your primary yardstick of acceptability is where the savings are spent, just like it is socially acceptable to drive 35 in a 30 zone late at night when there are no kids around and little traffic.

So let's say the savings from the grubby wee scheme (legal of course) are spent in the UK . Perhaps cash is brought in and used to pay our friendly local builder or possibly for school fees that are spent on local teachers and local suppliers ......

At least we know MPs didn't pay cash for their duck ponds and the like :-)

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By AndyC555
25th Jul 2012 15:20

"context is everything.....

"context is everything......break the speed limit by a couple of miles...ok ?....(the majority do it....of course doesn't make it right), go 50 in a 30....probably endangering lives. "

 

Simple physics dictates that the stopping distance of a car is going to be longer if you're doing 32 than if you're doing 30.  If the child stepping out in front of your car is at that crucial distance then you are just as much endangering life.

What you're saying is that YOUR morality allows you to take that risk.  And what of someone who travels at 34 and is comfortable with that?  Will you moralise about their behaviour? Seems to me that in discussions, virtually everyone finds THEIR tax avoidance OK and sets the moral barrier just a little higher above that that they expect of themselves

But here we aren't even talking about lawbreaking.  If tax avoidance fits within the law what are morals to do with it?  Try getting HMRC to reduce late filing penalties on moral grounds.  Changes in the law now mean someone in a repayment position could be charged £1,600 for late filing their tax return.  This up from nothing the year before. How can morality be expected to only work one way?

Your speeding anology is better understood if you think there is something 'morally repugnant' about someone avoiding a speeding fine by travelling at 29 in a 30 zone.  If you want to campaign for lower speed limits, do that, don't criticise people who stick within them.

 

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By justsotax
25th Jul 2012 16:13

I just knew an analogy would get me into

trouble one day!  Lets get to the point...(and back to my analogy for my sins) - going over 30 in a 30 is illegal....is going 31 the same as going 41....not in my book but yes its clear cut illegal.  But what happens if the road conditions change....sleet/snow/ice maybe.....is 30 safe then? (is 10....?)....nothing illegal - sticking within the speed limit so 'technically' not breaking the law.  Of course if you then have an accident your case may be reviewed and you may have action taken against you perhaps under reckless driving etc......  as is the option for hmrc to challenge the use of these tax schemes that on paper appear to be 'within the law' but are open to challenge given the circumstances.  So which is more dangerous 32 mph in dry conditions or 30 in icy conditions.....'simple physics' says to me 32 mph in dry conditions  (of course in either case if i have more of an eye on the speedo than on the road i think i may be endangering that kids life even more if he/she steps into the road....do they not teach the green cross code anymore....)

 

So i guess i am happy with my analogy and comfortable with my moral stance (although the moral bit did relate to Mr Gaukes use of the word).  If a tradesman wants to take a risk by taking some cash here and there....so be it....he knows the risks (and yes to me £200 is different to taking £10,000 in cash).  A scheme on the other hand in this context whilst technically appearing not to break any rules is often just a sham in order to allow 1000's of tax to be avoided....so yes context is everything.  (if you need further proof best get to the local court - find two people up for murder and then see the sentences they get.....)

 

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Norman Younger
By Norman Younger
25th Jul 2012 16:33

Speed limits and morals

A speed limit is exactly that - a limit . So as conditions on the road change , be it weather or the presence of a bunch of kids at the roadside , the safe speed reduces , and if you doubt that , see what happens if there is a collision because you are doing 28 on a sheet of ice. We move from the realm of acceptability and morality to that of facts - was your driving suited ot the road conditions ?

The law defines the limits for paying or not paying tax. Within the biundary it is legal , outwith it it is not.  The moral reasoning may turn on whether it is a commercial arrangement. Now it is a case of your word against the officer's , a bit like our friend who has a prang at 28mph

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By AndyC555
25th Jul 2012 17:03

"I am the Law"

So where, between avoiding tax on £200, which you deem is 'different'  and on £10,000 which isn't OK, do you draw your line? £250? £9,000? £495.20?  £6,724.32? Whatever amount you chose, why is £1 more morally unacceptable to you?

That's why this 'morality' argument is bogus. If morality is objective, there's no difference morally between a hairdresser slipping a £2 tip into her pocket and Jimmy Carr.  If morality is subjective, why is one person's morality worth more than another's? How can you argue that 'morally' avoiding £50 in tax is OK but not £51? Or is there a 'grey area' in morality?

It's to avoid tangles like this that morals should be kept out of the law (or incorporated into them if that is what is decided) but not waved about around the law just because you don't like the particular result that occurs.

  

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By justsotax
25th Jul 2012 17:43

Like i said.....illegal is illegal....

i don't dispute that and the tradesman takes a risk....but i am not going to march down to number 10 on the basis that someone has pocketed a fiver. 

 

I assume that you don't have any problem with someone getting locked up for 6 months for stealing....(6 months for a bottle of water....) just ashame that when it comes to fiddling millions (not re these schemes but referring to some of our banking friends) it appears a slap on the wrist is fine) - like i say context is everything....but i trust if you do ever get caught speeding you won't let the policeman let you off with a talking too....you will of course insist on 3 points...even if it was only 31mph and it was in dry conditions on a road that doesn't contain a school....

 

You want black and white.....but you won't find it in tax legislation.....thats why we depend upon case law half the time....that gives it the context within which we look to operate...

 

 

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Norman Younger
By Norman Younger
25th Jul 2012 18:19

Morals and the law

When there is legislation morals have no place, as correctly mentioned above. It is either legal or not legal, period. Strict liability - at that point the only argument is over the facts.

With regards to sentencing , it is the tariff that may require tinkering with, but the latitude judges have probably reflects the prevailing views of society at the point of sentence. This could be where different moral standards create an issue.

As a general observation I look around and see that in the public at large there is a general lack of morals , which are euphemistically termed "traditional values" . Give most people a chance and they'll pocket an error by the shop.

I once went back to Tesco to tell them they had given my wife £10 too much change. They said they would contact me after tilling up but as I left the store the manageress said "I have never seen this before" - I was lucky not to be sectioned , it sits in the grounds of a large mental health hospital !

By the way , they could not trace it , presumably somebody else got £10 too little and the books tallied.

 

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By justsotax
25th Jul 2012 22:44

Well I guess we have gone full
Circle.....the guy who exceeds 30 should quite correctly get done.....but meanwhile parasites down the road meet the needs of the rich and famous by constructing technical arguments as to why their client having been found doing not 35 not 40 but often significantly more than the that get off on a technicality.

So the rich guy gets off having been found not guilty.....good luck explaining that to the poor sod who gets run over the next time the person speeds so recklessly....but he didn't technically break any laws...so that's ok.

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By justsotax
26th Jul 2012 09:25

Oh and for the record....

1) taking cash for a job is not illegal....

2) offering a discount for taking cash...is not illegal

3) Offering a discount equivalent to the vat.....erm...is not illegal (citroen have a regular campaign where they sell the cars for the vat less price...i presume they put the sales thru the books)

 

Those are the facts.

 

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Replying to swatt66:
Norman Younger
By Norman Younger
26th Jul 2012 09:51

Discount equal to VAT

It's the only way they could shift some of their naff models. Can't recall seeing the advert for the latest ones that are pretty chic , although not quite my taste.

I wouldn't describe the advisers as parasites , they are doing a job and being paid for it. Are they any different to the barristers who know their client is banged to rights but take the stand and dismantle the case on a legal nicety ?

 

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By justsotax
26th Jul 2012 09:57

no you are quite correct, they are no different....

parasites in it together...

 

and you are right the latest models don't seem to attract these discounts.  Mind you begs the question of the quality of work/materials on the discounted job i guess...get what you pay for and all that.....

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