Many of the more reputable offshore banks will require evidence of your invoicing for larger sums (usually $5k+) before they will accept the incoming funds. This is to make money laundering harder.
In respect of large companies… they will have businesses established in many jurisdictions (all operating within the law for each jurisdiction) and transfer monies between these in the course of "normal" business trading. The monies/profits flow to the lowest tax jurisdiction - thus staying within the law whilst avoiding the worst of high/excessive tax jurisdictions like USA/UK and many other EU countries … why pay tax at 30/20 or 18% when you you only need to pay at 12% or lower? A company has a duty of care to it's shareholders and paying unnecessary tax is not fulfilling that duty.
As I point out to all clients, in the event of an investigation HMRC will primarily look at the flow of monies/paperwork - £10k of expenditure with only £800 showing (if at all) for it will immediately lead to the question "where did the other money come from?" plus an assumption that you have a hidden source of income they need to tax (and hand you penalties for).
I am personally of the opinion that current levels of tax are excessive and so careful tax avoidance is perfectly justified (by careful I mean avoidance that will pass any investigation)… but buying invoices (as in the article above) is simple tax fraud… any client that suggested that (or I found had been involved) would be shown the door immediately
It's well known in economics that low taxation boosts the economy (and boosts long term tax revenues) and vice-versa … it's also well known that as tax rates lower so does avoidance and evasion. According to the Adam Smith Institute the effective (real) rate of UK tax in 2017 was 44.65% (including indirect taxes and duties)
This is a ridiculously excessive rate that both encourages people to seek a fair rate (avoidance) and damages the economy. If the politicians really want to get rid of avoidance and to help remove poverty then they should start reducing tax rather than demonising those people who take steps to lower their excessive tax bills
Ian - the remains that roughly 95-98p of every £1 paid in income tax is wasted, and hence pointless. You are right that schemes relying on loopholes and barristers opinions are high risk, but there are other ways to considerable reduce a businesses tax burden without relying on such schemes. We have been designing business structures that reduce/remove tax for clients for over 20 years (e.g mini "googles")… admittedly we are specialists in international tax, knowledge that many accountants do not have to hand, but telling a client to be happy paying more tax would, to us, be an admittance of failure.
I agree that people who rely on dubious tax loopholes to avoid tax are mugs, but then so is everyone who does not try to reduce our excessive taxes. In 2015 HMRC reported that legal tax avoidance was worth 2.7bn… in 2013 after analysing government expenditure the tax payers alliance concluded that the Government was guilty of needlessly wasting 120bn per year (98% of income tax receipts).
Tax avoidance does not impose any burden on taxpayers, the burden comes from the financial incompetence of the government
The aim is obviously to ensure the growing business does so in such a way as to generate higher levels of tax since most sensible large companies will seek help from firms like mine to structure themselves to pay less tax (fairly easy to do) or even no tax at all (still not that difficult)
Quote: 'Based on HMRC’s approach to other taxes, it will continue to make this data available via the entity’s Digital Tax Account. Businesses will need to go through a two-step verification process to access the data, thereby preventing access by third parties such as accountants.'
As usual, try and push the accountants out of the way because they are the ones who identify 97% of HMRC errors and they (most of them) don't roll over and let HMRC bully them into submission
Rather than concentrating on tax rates the government (and pressure groups) should concentrate on reducing government waste and ensuring all government spending gives the best value for money possible. A study a few years ago suggested that government waste (just waste, not poor financial management) accounted for some £40bn or ten times higher than the estimate for tax avoidance at that time. Factor in poor value for money etc and that figure could be double. Even with reduced spending (austerity) the amount of money wasted by the government comes out at around 30% of tax collected (Income & corporation tax for 2014 = £207bn). If government spends wisely and carefully there is no reason whatsoever to increase tax … increasing tax is simply throwing good money after bad, a totally pointless exercise.
HMRC are not corrupt, but their incompetence and over the top heavy-handedness in dealing with mistakes (often their own) does mean that as a business they would be out of business within a month because no-one in their right mind would deal with them if they were not forced to
Seems like a 10,000% ROI to me - a few million's in cost to get many billions in savings each year… well worth it.