Ineffective tax avoidance: targeting the enablers
An all-party parliamentary group on Anti-Corruption and Responsible Tax chaired by Dame Margaret Hodge launched a pre-emptive strike to lobby for stronger anti-avoidance measures head of this week’s draft legislation.
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Rather than Margaret Hodge, why don't HMRC simply pay someone like me to kill off DR etc. schemes? I could have done that with a very small stroke of the pen back in 2010, but instead they implemented the ridiculously complicated and loophole filled P7A regime.
I recommend that you all look into the affairs of the "Honourable Margaret Hodge" and that of her family. You will find it interesting. Family companies not paying thier "fair share" of tax and her and her children involved in various trusts which I am assume have tax avoidance motives.
Typical corrupt politician.
While it wouldn't surprise me in the least if this were the case, but do you have anything to back this up?
https://www.google.co.uk/search?q=margaret%20hodge%20family%20trust%20ta...
first search result is from some dodgy website accountingweb.co.uk - but the other should provide enough info
Then I apologise for doubting! I'd forgotten I was on an accountancy discussion board rather than a Facebook free-for-all!
Here we are. I could provide other information but this gives you a flavour.
https://www.accountingweb.co.uk/tax/hmrc-policy/margaret-hodge-benefited...
It's always the hypocrisy of politicians that stand in the way of finding a solution to any issue, even if there is lack of forethought that results in the problem arising in the first place. Any of us could solve the problem in a very short time.
The way to stamp out aggressive tax avoidance seems very easy to me. They just need to make every accountant, lawyer, introducer, banker, agency, promoter,tea boy etc who is any way involved in the scheme to have joint and several liability for the tax lost. That will soon focus minds.
Same old, same old. There is only one way to curb fraud (cos that's what avoidance with artificial elements in it, are) and that is court action.
Of course you could always simplify the tax system.
So expect more compliance fines for the many and more tax breaks for the big boys and multinationals.
Justin is that an H or an R.
"However, as Hodge pointed out, the Exchequer is desperately in need of funds to fill the coronavirus hole "
I'm surprised that any accounting site would allow such a comment to pass without pointing out the silly fallacy. Tax avoidance causes more activity in the economy since it means that people retain money and can spend it- which means the taxation point just moves somewhere else and somebody else pays the tax. Since my spending is your income less tax and vice versa, the total tax take depends upon the level of saving. Scared people save more, which by accounting identity leaves a larger deficit.
The issue with tax avoidance is one of distribution and control. Some people get more spending power than the Exchequer intended. It's a question of distributional fairness and integrity of the tax system.
Tax Avoidance is nature's way of telling your your tax system is too complex. Make it simple and ensure those who then evade tax or help others evade tax do jail time.
Tax avoidance schemes with elements that are artificial are not tax avoidance, they are tax evasion. Unfortunately HMRC keep lumping avoidance and evasion together. They are not the same. It really is black and white.
Couldn't put the argument better myself. If the government really wanted to tackle aggressive tax avoidance it needs to make the tax system simpler rather than building layer over layer
It is my considered view that before we go chasing these so called wrongdoers, HMRC should clean up its act and cease its underhanded, bullying and dirty behaviour towards the many innocent taxpayers it attacks.
Firstly, HMRC is the administrator of tax law, not the law maker - this seems to have been lost somewhere along the way in the last few years.
Secondly, unreasonable and aggressive behaviour by HMRC should result in the individual perpetrators also being subject to fines and imprisonment - that would curtail some of the unacceptable behaviours and tricks we are currently witnessing as accountants and tax advisors.
Thirdly, government officials, who are supposedly the leaders of our democratic society should abide by their own laws. In that way taxpayers could at least believe in the tax system as a "fair" (there's an oxymoron) system.
Finally, whilst I do accept that "tax fraud" is being committed and "unacceptable tax avoidance" takes place, most of what I see is the attacking of naive and innocent taxpayers who have not known the rules or have made innocent mistakes. Instead of immediate penalties, it would be more appropriate to educate (or warn only with explanation) in the first instance and only penalise if the same mistake persisted. Equally, it should be the case that if HMRC makes a mistake (in the current regime) it is mandatory to pay a penalty back to the taxpayer - not just tax returned with interest. Lets get some equality and (dare I say it) "fairness" back into the system.
Please can someone explain this comment:
As she elaborated, “Much revenue is lost from tax avoidance schemes that simply do not work...."
If the scheme doesn't work, no tax will be avoided.
It’s ‘lost’ to the taxpayer (in the global sense) until such time as the scheme is defeated and the tax repaid - which can take years.
HMRC said many years ago that if a scheme had an element that is artificial then it would ban it. They never did and this is why we are in this mess now.
Problem is that it is not HMRC’s place to ban anything. That is down to the courts and the legislators.
My point was that if HMRC had taken action when they said they would then we wouldn't be in this position.
If HMRC says it doesn't like a scheme and bans it then the courts will only decide if that decision is appealed against. Had this been done years ago these schemes would never have come on the market.
"the Courts" and some decisions are really on a knife edge, many of the film realted schemes turned on incredibly arcane interpreattions of what expenditure were of a capital or revenue nature, as they say, a different judge a different day.
On the basis of her argument every S42 and S48 film partnership that had the film passed as qualifying by the DCMS and on which initial tax relief was grante should have any subsequent penalty restored, clearly HMRC thought they worked at the time and it was only a change in poitical climate that casued them to change their opinion. I have, by the way,no truck with the "chancer" end of the perfectly legal tax reduction activity.
Its 2020 and the tax avoidance debate rumbles on, it will still rumble on in 2030 and beyond. A further crackdown, just goes to show the previous crackdowns have been useless, intentionally or otherwise.
However, as Hodge pointed out, the Exchequer is desperately in need of funds to fill the coronavirus hole and one possible route might be a further crackdown on tax avoidance schemes that are deemed to be abusive and, as such, unfair to taxpayers.