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Tax profession just doesn’t get it

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1st Jun 2015
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It took a top flight lawyer to tell the tax profession what they didn’t want to hear: That they are out of touch with the zeitgeist on matters of tax avoidance.

Des Hudson, former Chief Executive of the Law Society and current chairman of the Taxation Disciplinary Board was addressing the great and the good of the tax profession at the CTA Address. His core argument was: There is a disconnect between the tax profession and what society demands on tax behaviour. To bridge this gap the tax profession must reconnect with society as a whole. 

A member of the audience said the standard of behaviour tax advisers should adhere to is to advise clients to pay all the tax the law requires – not a penny more – and that clients should be assisted to pay as little tax as possible. Des Hudson said this was exactly his point: such behaviour is no longer socially acceptable.

If organisations and individuals are seen to be avoiding tax, even through legal means, that is wrong.  He went on to say that society’s expectations of the tax professional now goes beyond telling clients what the law allows, and arguing if you don’t like what the law allows then change the law. That position is no longer seen as persuasive, and the tax profession will fail when using that argument.

Tina Riches of Smith & Williamson made the point that current world of tax advice is completely different to that perceived by the public, as the tax cases going through the courts now are a result of what happened ten years ago.

Several members of the audience also emphasised that a big stumbling block to reforming the behaviour of certain tax practitioners is that the “tax profession” is not regulated; anyone is free to call themselves a tax adviser and is accepted by HMRC to provide tax services.

If Government wants to alter the way the professional bodies act they should consider whether tax should become a protected profession, with statutory rules on who can provide tax services. Des Hudson accepted that restricting who can provide tax services, such that those practitioners are subject to the professional bodies’ ethical code and rule book, is in the public interest.

Another view from the floor was that the profession should fight back and argue against the positions put forward by some of the so-called representatives of “civil society”, that the UK would be in a horrible position if tax legislation was applied in the way those representatives want. Des Hudson said it was too soon to do this, as informed public opinion is currently against tax avoidance.                                                

What do you think?  Should we be concerned with the opinions of the vocal section of society who hate the bankers, as they have a nil understand of the difference between tax planning v. tax avoidance v. tax evasion?

Rebecca Cave is the author of Tax Rates and Tables 2015/16 (Pre-Election edition)  published by Bloomsbury Professional.

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Replies (92)

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By wyoming
03rd Jun 2015 12:32

Terminology

I think that we in the tax profession are fighting a losing battle when it comes to getting the wider public to understand the difference between tax evasion and tax avoidance. The average Joe or Jo will simply say that one is illegal and the other should be. We need to try to move the conversation on - accept that the more aggressive forms of avoidance are simply going to be treated by most people as being as bad as evasion and get them to think of more mainstream tax mitigation as tax planning - not avoidance in the sense that has now become common currency but a different beast, i.e. legitimate planning (e.g. via pensions, ISAs, EIS, VCT etc). At least much of our work would then be below the radar as far as the morality crusaders are concerned.  

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By mewsans
03rd Jun 2015 12:44

Des Hudson.......

Is clearly a man who is looking to move into politics and is positioning himself accordingly. What he says is nonsense. Is he seriously suggesting that "morally" we (and our clients) should pay the "correct" (for which read maximum ) amount of tax in accordance with the law of Saint Margaret Hodge!!

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By Ian McTernan CTA
03rd Jun 2015 12:54

A Lawyer

Trying to tell us what is right and what is wrong?  Really?

Put your own house in order first please- lawyers dedicated to getting people off on a technicality (and many other things, too many to list) are a darn sight more important to me than whether the public perceives avoidance and evasion of tax as the same thing- mainly because politicians have managed to steer the sheep in that direction.

So the next time that criminal commits another crime (such as breaking into your expensive house paid for by your huge legal fees), at least we can draw comfort from the fact that tax avoidance is now seen as a crime by the public.  I'm sure that will make it all alright.

Maybe the OP should concentrate on getting legal costs reduced (which seem so high as to be a crime), reform the law so that it is clear and simple, and criminalise getting off on a technicality.  Then start on us.  At the moment, 'pot, kettle, black'.

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By David Gordon FCCA
03rd Jun 2015 12:55

Bullshit

 

 Having a lawyer lecturing me about tax avoidance is more than the pot calling the kettle black.

 It is the whole bonfire so doing.

 Accountants do not make the law. We use it as it is writ.

  Perhaps the gentleman's accountant would care to tell us what tax planning he is involved in?

 It is worth reminding ourselves that when asked, most persons tell the pollsters that of course they would pay a bit more tax to fund NHS et al.

 Nevertheless when the time comes to put the cross on the ballot paper?

 If you do not want to live in a country where the word of law (Democratically arrived at) is the word, go live in Zimbabwe or North Korea. 

I It is a great pity that these pontificators do not spend as much time campaigning for the the "Law" to be enacted in plain English as they spend in telling us what we ought "Morally" to do. 

 A tax lawyer telling me to behave "Ethically"!! My answer in plain Essex speak is

 "Go pee on your own doorstep". - and while you are at it, get me my client's refund that he has been waiting over a year for.

 

 

 

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By justsotax
03rd Jun 2015 12:55

as the mosquito said

in the kids movie 'Bee Movie', when asked if he was a lawyer

"I was already a blood sucking parasite...I just needed a brief case'...

 

enough said...

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By Simon Sweetman
03rd Jun 2015 13:09

missing the point

Well, chaps, you've proved his point , haven't you ?

The tax profession is simply in denial (onje might say, like the tobacco industry before it). Times have changed, largely because of the activities of "tax planners", and what was acceptable (like racial abuse) is no longer so. If this is not voluntary it will be complusory. So it goes.

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Replying to Ben McLintock:
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By stepurhan
03rd Jun 2015 16:28

Nothing proven

oldersimon wrote:
Well, chaps, you've proved his point , haven't you ?

The tax profession is simply in denial.

Saying someone is wrong is not the same as being in denial. If someone says that grass is blue, I am not in denial by saying that is not the case.
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Times have changed, largely because of the activities of "tax planners", and what was acceptable (like racial abuse) is no longer so.
Your very use of quotes undermine your case. "Tax planning" implies the sort of artificiality that most posters seem to be condemning. To compare everyday tax planning, well within the bounds of the law, to racial abuse is a bit insulting really.

Quote:
If this is not voluntary it will be complusory. So it goes.
Or in other words, sort out the tax law. Which is also what many people seem to be saying.
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By whiteways
03rd Jun 2015 13:18

He's welcome to his opinion.

As accountants we are there to interpret and explain tax law. We are not the moral arbiters of tax law, and it is simply not reasonable that we be asked to fill that role.

"If you don't like the law, then change it", is just as valid as ever. If people have stopped listening to that argument then they need to start listening again. The responsibility for how the system works rests with those who have the power to change it, i.e. government. We should be putting the ball squarely back into their court.

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By Casterbridge Hardy LLP
03rd Jun 2015 13:34

BIG BROTHER IS WATCHING YOU

I remain totally astonished by the pontification of the speaker and the widespread obeisance of the audience.  The last time I checked I was living in a quasi-democracy and I find it totally incompatible with basic freedoms for even more regulation to be regarded as a panacea for all ills - we already have H M R C leaning on some practitioners and "grading" practitioners by what they perceive as levels of competence:  that really is rich coming from an organisation which cannot even look after a form 64-8!  My practice will not alter a long established policy of ensuring that clients pay only what is required by law (another commentator has already [and accurately] quoted the name Duke of Westminster).  The incompetence if the legislators in framing legislation does not, in my view, mean that it is axiomatic that honest tax practitioners should throw clients to the tax wolves - and, finally, what does and does not qualify as aggressive tax avoidance is a matter of opinion and a wholly moveable feast.  Now where did I leave my copy of Magna Carta?

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By IANTO
03rd Jun 2015 14:04

Personal Service Company

Once again, we have this misconception, disseminated by HMRC. There are only two types of company, PLC's and LTD's. Personal Service Companies do not exist in law. So please let's refrain from repeating these statements

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By johnjenkins
03rd Jun 2015 14:07

@listeramjet&othersimon

The idea is to re-structure your company so as to pay less of anything (including tax) without being artificial. That is the difference between Tax Avoidance and Tax Evasion.

M&S is a classic example. All their UK sales go through UK and corp tax paid. All their other worldwide sales go through Ireland to take advantage of lower corp tax. That is clearly tax avoidance which HMRC challenged and lost.

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By The Black Knight
03rd Jun 2015 14:31

morals?

I would say the requirement is to act within the law and there is plenty of case law setting out the correct position that these snake oil salesmen should have been aware of. Many of these schemes did not work and those that did were probably not subjected to any legal scrutiny.

So this is really a non-argument the tax avoidance issue is really about HMRC not doing their jobs properly (until recently that is however)

how many times does one have to say it THERE IS NO POLICING out here in the real world.

NO ENFORCEMENT = NO LAW

If tax was about Morals then we should all have serious issues about paying any at all because it is often spent on bombs that kill children, subsidising religious hatred, supporting corrupt governments and oppression of the people.

If you deliberately sell a defective product (these people held themselves as experts when they appear to have not known anything about tax or accounts) then Surely this is fraudulent trading??

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By DHillside
03rd Jun 2015 15:01

I'm just a humble tax adviser

As a Chartered Accountant of 30+ years experience I see my role as being a paid professional who gives his clients their legal choices - always within the law. For example with a computer consultant he can go PAYE and take home about 50% of his gross pay, or chose to form a limited company and take home about 70% or chose a tax strategy that will get him up to 85%.

That choice is his to make and not mine. Of course there are risks associated with each choice which I explain in detail. I am not interested in morality - just what is legal. If that makes me a bad accountant then I had better retire right now and hand over to the 'tax by morals' brigade. The vast majority of clients I deal with want to pay less tax and will make their choice accordingly. Surprisingly few of them ask me what I think is 'socially acceptable' If one ever did I would point him to Don Hudon who can no doubt advise him better than I ever could or would ever want to.

 

 

David Hillside

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By carlh
03rd Jun 2015 15:07

not a truer word said

love the responses from certain individuals, its nice to see a debate going on.

 

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By adagen
03rd Jun 2015 15:22

Zeitgeist - the spirit of the age. And when it comes to tax matters, zeitgeist is not the same thing as aggressive PR. I wouldn't trust a lawyer who tries to persuade us that the two are identical.

HMRC has made massive efforts to conflate tax avoidance and tax evasion, and certain red tops have colluded. They capitalised on certain egregious cases of aggressive tax avoidance to stir up envy and divert attention from the fact that for years HMRC has been trying to frighten small businesses into paying more tax than was due, rather than focusing their efforts on those big corporates with big contacts who pay laughably low levels of tax.

Certainly there is unease about aggressive tax avoidance. Equally there is a growing number of taxpayers with the view that there is something wrong with the way increasing taxes are accompanied by decreasing quality of services. That's an issue of public sector management, nothing to do with the accountancy and tax profession. To try and conflate the public sector management with assumed social attitudes rates the same score on the honesty scale as HMRC's conflation of evasion and avoidance.

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By carlh
03rd Jun 2015 15:35

web.archive.org/web

cut and paste the entire line to get at the original document they put up.

web.archive.org/web/20140122112215/https://www.gov.uk/government/policies/reducing-tax-evasion-and-avoidance

love hmrc's last sentence at the bottom of that page.

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Replying to Hazel Accounts:
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By adagen
03rd Jun 2015 16:03

Ah, but you need context. These days avoidance and evasion are only two thirds of the definition. It now needs to be extended to define abuse!

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By Tom 7000
03rd Jun 2015 17:37

Advise clients to pay more tax than the legal minimum...

sure...if you want to be sued...and I have seen it !!!!

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Replying to kerrysmith000:
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By I'msorryIhaven'taclue
03rd Jun 2015 20:39

Keeping Mum?

Tom 7000 wrote:

sure...if you want to be sued...and I have seen it !!!!

Agreed, and since a negligence claim can be based on an act OR an omission then surely any failure to advise a client on how to reduce his tax might also land an accountant in the soup.

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By mugelbbub
03rd Jun 2015 18:50

Is?
Des Hudson advocating all the tax advisors should be working for the Revenue and making subjective moral judgements on behalf of society and taxpayers?
Who will be on my side then?

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By Jane W
03rd Jun 2015 19:31

taxation - creating a healthy balance

Mr Hudson may actually understand the failings of the global debt based economy.

 Mathematical modelling indicates that the uncertain inputs from speculation distort the network architecture such that the 'rich get richer'.  This may sound great to some people, but odds are you're not going to be the single player left standing in the resultant mess.  There are two main ways of rebalancing the system, one of which is to redistribute money through taxation.  

As is being demonstrated in the Middle East, the creation of a huge underclass with nothing left to lose and easy access to weaponry is to be avoided.

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By Mikolaj
03rd Jun 2015 21:52

My comments at the CIOT Address

I was the CIMA representative in the room whom raised the wildly held concerns about our profession/s being unregulated. To repeat, a fundamental problem being that HMRC accept all of Dave, Dee, Dozy, Beaky, Mick and Titch as registered tax agents. Until HMRC fundamentally change their stance on accepting agents, i.e. only accepting qualified accountants and tax practitioners as properly accredited HMRC agents, then the public cannot and will not have confidence in our tax advocacy profession.

The distinction between tax planning (aka tax avoidance) and the notorious tax evasion must be made clearer, however, this can only be done by the legislators; notwithstanding, there is no room for notional morality either way: Tax planning = good, tax evasion = bad, this needs to be understood and promulgated to one and all. Making the distinction need not be complicated, as is the choice between what is right and what is wrong. I think we can all do this.

 

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By johnjenkins
04th Jun 2015 09:56

@Mikolaj

Totally disagree with your comments. In fact I will go as far as to say "you haven't a clue about public conception. Everyone new members of FIFA were "at it" yet these officials kept on churning out the same crap thinking the public were behind them, just like HMRC.

Who would have thought the Tories would have got in with a majority?

Let me enlighten you about agents. Most agents are all controlled either by bodies or Customs and excise. What makes a Tax Practitioner more reliable than an unqualified agent????????? Qualifications mean nothing. It is the art of applying knowledge that is important. How you gain that knowledge is irrelevant.

Now let me enlighten you about Joe public. They are all aware of some "big boys" having clever dicky Accountants and lawyers in their backyard. They are also aware of HMRC being incompetent, through protracted dealings with them. They are also not bothered about anybody paying less tax as long as they get similar benefits. As I said before once the "Status Quo" is messed about with all hell breaks loose.

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By johnjenkins
04th Jun 2015 11:40

What the Duke

said is still true today. There is no legislation against tax planning. Surely it is in everybodys best interest to limit their outgoings and that must include taxation. Do the Government say right we need more money let's not tax people? I don't know why some of us have problems with the difference between avoidance and evasion. I I I I I I I I forget the other guy. (hope I got that right Huw).

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By tedbuck
04th Jun 2015 11:46

TAX PAYMENT AVOIDANCE EVASION AND MORALITY

Great when Politicians whip up a storm about tax avoidance when they are the leaders in the game with their expenses claims. Why not start there and put them on the same rules as the plebs who pay their salaries?

Then, and only then, can they comment on tax morality.

As for the rest I have always taken the view that clients shouldn't pay more tax than they have to by law and if they can so arrange their affairs to pay less tax by trading through a company for example then they should be advised so to do.

Surely no-one would dispute this?

Where do you draw the line between what is right and what isn't? In my view, if I wouldn't be happy to stand in front of a tribunal and defend my case with a straight face and a sincere belief that I am right and the belief that the tribunal would agree with me I wouldn't suggest to a client that he/she do what I wouldn't do myself. It has never been a difficult stance to take although clients will occasionally decide to go against advice with mixed results.

A lot of the blame here falls on the lawyers who come up with tax avoidance schemes which would only appeal to the very rich whose tax bills are so high as to make the cost/risk analysis look attractive and the rest of the blame lies with HMRC who are so slow to attack such schemes as they have been to address the transfer of profits out of the UK by multinationals. I suppose the truth is that all the good HMRC people have seen the light of day and changed sides.

Beware people shouting out how moral they are and how bad everyone else is - there is a proverb somewhere about glass houses and stones. Back to where we started - with the politicians. If they can do it why shouldn't everyone else? Isn't there something about leading by example?

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By Lawskills
04th Jun 2015 12:43

Why would a lawyer post on an accounting web site?

Mr Hudson does not represent solicitors - he did - but he is no longer Chief Executive of the Law Society. He left and has accumulated a number of alternative roles.

As a lawyer who has had an interest in tax since 1975 it is clear that the public perception of one type of tax planning i.e. corporate, is seen by the 'man on the Clapham Omnibus' as tax avoidance which should be equated with tax evasion; whereas the type of personal tax planning which many of us engage in every day to reduce the hated IHT bill is lauded as simply managing a person's wealth appropriately and by the way, says the Daily Mail reader, we should abolish IHT. Yet we still as a society might say that redistributive wealth is a good thing as long as it is not my wealth! (Hypocrites all?)

I attended a conference organised by the London Branch of the CIOT last year at which Margaret Hodge spoke and I would agree with others that to a very large extent this mistaken approach to tax planning, tax avoidance and tax evasion all being muddled together as 'wrong' needs unpicking and can largely be laid at her feet, but none of the bright speakers and delegates went any way along the line to doing so. One speaker used a great analogy or story to explain something else and I said (as a lecturer) that if only we all could adopt that way of speaking (i.e. explain using simple stories and parables we all understand) about tax and commenting about the differences in a way that the public would understand we might find a different public mood.

Posters are right when they point out the hypocracy of those speaking and holding 'tax professionals' to account. We can all be hyocrites at times but I would agree with many who have said:

simplify taxunify the 'profession' and encourage transparent regulation which the consumer and business can understand (at the moment the regulatory framework for legal services is so complicated and that for accountancy is so limited that neither would act as a blueprint)engage in educating the MPs and Lords in detail because they decide on the law in the end and many do not understand tax or any part of itfind spokes people who talk the language of 'everyman' not just fellow professionals or laypeople or corporations; and then value them

Just a thought from a boring old lawyer. I wait for the brickbats to come my way!

Gill Steel

 

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By Ken of Chester le Street
04th Jun 2015 13:29

sauce for the goose

I'm retired now, so I can say it. Can every Government department confidently say that it has never used the services of a company that relies on professionals who operate through IR35 companies? 

Can't say no more!

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By peterhool
04th Jun 2015 15:33

Bit long and a bit old but makes a point

The Squirrel
REST OF THE WORLD VERSION:

The squirrel works hard in the withering heat all summer long,
building and improving his house and laying up supplies for the
winter. The grasshopper thinks he's a fool, and laughs and dances
and plays the summer away.

Come winter, the squirrel is warm and well fed. The shivering
grasshopper has no food or shelter, so he dies out in the cold.
THE END

THE BRITISH VERSION:

The squirrel works hard in the withering heat all summer long,
building his house and laying up supplies for the winter. The
grasshopper thinks he's a fool, and laughs and dances and plays the
summer away. Come winter, the squirrel is warm and well fed.

A social worker finds the shivering grasshopper, calls a press
conference and demands to know why the squirrel should be allowed to
be warm and well fed while others less fortunate, like the
grasshopper, are cold and starving. The BBC shows up to provide live
coverage of the shivering grasshopper; with cuts to a video of the
squirrel in his comfortable warm home with a table laden with food.

The British press inform people that they should be ashamed that in
a country of such wealth, this poor grasshopper is allowed to suffer
so while others have plenty. The Labour Party, Greenpeace, Animal
Rights and The Grasshopper Council of GB demonstrate in front of the
squirrel's house.

The BBC, interrupting a cultural festival special from Notting Hill
with breaking news, broadcasts a multi cultural choir singing "We
Shall Overcome".

Ken Livingstone rants in an interview with Trevor McDonald that the
squirrel has gotten rich off the backs of grasshoppers, and calls
for an immediate tax hike on the squirrel to make him pay his "fair
share" and increases the charge for squirrels to enter inner London.

In response to pressure from the media, the Government drafts the
Economic Equity and Grasshopper Anti Discrimination Act, retroactive
to the beginning of the summer. The squirrel's taxes are reassessed.
He is taken to court and fined for failing to hire grasshoppers as
builders for the work he was doing on his home and an additional
fine for contempt when he told the court the grasshopper did not
want to work.

The grasshopper is provided with a council house, financial aid to
furnish it and an account with a local taxi firm to ensure he can be
socially mobile. The squirrel's food is seized and re distributed to
the more needy members of society, in this case the grasshopper.

Without enough money to buy more food, to pay the fine and his newly
imposed retroactive taxes, the squirrel has to downsize and start
building a new home.

The local authority takes over his old home and utilizes it as a
temporary home for asylum seeking cats who had hijacked a plane to
get to Britain as they had to share their country of origin with
mice. On arrival they tried to blow up the airport because of
Britain's apparent love of dogs.

The cats had been arrested for the international offence of
hijacking and attempt bombing but were immediately released because
the police fed them pilchards instead of salmon whilst in custody.
Initial moves to then return them to their own country were
abandoned because it was feared they would
face death by the mice. The cats devise and start a scam to obtain
money from peoples credit cards.

A Panorama special shows the grasshopper finishing up the last of
the squirrel's food, though Spring is still months away, while the
council house he is in crumbles around him because he hasn't
bothered to maintain the house. He is shown to be taking drugs.
Inadequate government funding is blamed for the grasshoppers drug
'illness'.

The cats seek recompense in the British courts for their treatment
since arrival in UK.

The grasshopper gets arrested for stabbing an old dog during a
burglary to get money for his drugs habit. He is imprisoned but
released immediately because he has been in custody for a few weeks.
He is placed in the care of the probation service to monitor and
supervise him. Within a few weeks he has killed a guinea pig in a
botched robbery.

A commission of enquiry, that will eventually cost £10,000,000 to
state the obvious, is set up. Additional money is put into funding a
drug rehabilitation scheme for grasshoppers and legal aid for
lawyers representing asylum seekers is increased. The asylum seeking
cats are praised by the government for enriching Britain's
multicultural diversity and dogs are criticised by the government
for failing to befriend the cats.

The grasshopper dies of a drug overdose. The usual sections of the
press blame it on the obvious failure of government to address the
root causes of despair arising from social inequity and his
traumatic experience of prison. They call for the resignation of a
minister.

The cats are paid a million pounds each because their rights were
infringed when the government failed to inform them there were mice
in the United Kingdom.

The squirrel, the dogs and the victims of the hijacking, the
bombing, the burglaries and robberies have to pay an additional
percentage on their credit cards to cover losses, their taxes are
increased to pay for law and order and they are told that they will
have to work beyond 65 because of a shortfall in government funds.

THE END

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Replying to nippy1:
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By Karen Watson
05th Jun 2015 12:51

Common or garden version:

The Squirrel isn't working at all, but simply pinching his "prudent" nuts from the birds' feeder.

And appears to be incredibly ingenious in circumventing every strategy put in place to frustrate him without also denying the intended beneficiaries.

The Human who pays for the nuts is getting rather fed up with this, and considering acquisition of (legal) ballistics....

(Sorry, can't post pictures of the little tree rat but the neighbours are getting their vocabulary rather widened :D )

 

 

 

 

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By David Gordon FCCA
04th Jun 2015 15:45

tax and "Morality"

 Unlike murder or theft tax is not a moral issue.

 Put away your cynical sniggers.

 As a group the subjects of her Majesty, in the Uk we are subjects not citizens, have demcratically decided that for the good of our society there should be a central fund for the purpose of works we democratically consider should be dealt with by a central management. For example, NHS, Defence, education.

 WE have democratically decided that we appoint a management committee to manage this on our behalf. This is parliament. For the purpose of administering this the management has engaged a paid department to administer to collection of this fund. This is HMRC.

 Parliament (is supposed) to set the rules.

 HMRC (is supposed) to administer them.

 Regrettably jointly and severally members of parliament have abdicated, avoided, ignored, their responsibility in this matter. As a consequence HMRC pretty well does as it pleases.

 Being a civil service depatment its first concern seems to be to make things as easy as possible for it self. Second, to prove its virility, by collecting money as easily as it can without any regard to "Reasonabilty".

 Civil Rights activists would be up in arms if the police service had the same facility to influence law and the use thereof  as has accrued by default to HMRC.

 Unfortunately there are no votes in getting the administration of the system "User friendly".

 No-one says thank you to the guy that follows the Lord Mayor's coach with a bucket and shovel.

 Being Jewish I can say this, much of what the politicians and the "Intelligensia" say about tax accountants is similar to what they used to say about us. In some cases just substitute the words, Jew, Muslim, or Black, in place of the words tax adviser or accountant, to get the flavour.

 If the profession collectively is not prepared to stand up for its clients and itself, it had better get used to being insulted.

 

 

 

 

 

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By Huw Williams
04th Jun 2015 16:50

The squirrel the grasshopper and all that

Lovely story - but what has it got to do with tax avoidance, which is the subject of the thread.

Oh and the grasshopper should have joined a union to benefit from the support of the Labour Party, but I guess if what you do is dance up and down all day the right union would be Equity and you can only join that if you are an Equity member .....

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By peterhool
05th Jun 2015 18:08

Lovely story - but what has it got to do with tax avoidance

There would be less need for tax avoidance if people who work hard and take risks (squirrels) did not have to support loads of people who prefer to rely on the state rather than working (grasshoppers) IMHO!

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Replying to Beach Accountancy:
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By Huw Williams
08th Jun 2015 16:05

Guns and tanks and police and ambulances and...

peterhool wrote:

There would be less need for tax avoidance if people who work hard and take risks (squirrels) did not have to support loads of people who prefer to rely on the state rather than working (grasshoppers) IMHO!

And if we stopped getting angry with each other and needing peacekeeping forces......

We are human.  But this is mostly a good thing even when we make mistakes.

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By pauljohnston
08th Jun 2015 08:35

As others have said

and I summarise.  The poster needs to meet real people almost all of my clients dont have sufficient income to consider a tax avaoidance scheme.  But everyone who comments on it says "If politicians dont like the laws they should chnage them".  Which brings to the debate that only policitians and the media keep harping on a subject it appears that they only have interest in.

What no one has said so far is how much Tax Revenue is at risk and how much is it costing to have all the highly qualified HMRC staff trying to challenge past acts.  Surely the best way forward, if cost effective is to stop such schemes in future.  The issue of APNs are no doubt causing some pain but what is it going to cost the tax payer in repaying the amounts raised now and the interest and HMRC legal costs when HMRC dont win?  It is going to be very unlikerly that all will be won.

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Replying to Wilson Philips:
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By Ken of Chester le Street
09th Jun 2015 09:51

If they don't like the laws

pauljohnston wrote:

and I summarise.  The poster needs to meet real people almost all of my clients dont have sufficient income to consider a tax avaoidance scheme.  But everyone who comments on it says "If politicians dont like the laws they should chnage them".  Which brings to the debate that only policitians and the media keep harping on a subject it appears that they only have interest in.

What no one has said so far is how much Tax Revenue is at risk and how much is it costing to have all the highly qualified HMRC staff trying to challenge past acts.  Surely the best way forward, if cost effective is to stop such schemes in future.  The issue of APNs are no doubt causing some pain but what is it going to cost the tax payer in repaying the amounts raised now and the interest and HMRC legal costs when HMRC dont win?  It is going to be very unlikerly that all will be won.

"If politicians don't like the laws they should change them"

I understand there are 12000 pages of laws, plus all the tax cases and extra-statutory concessions. Where do you start?

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By David Gordon FCCA
08th Jun 2015 11:10

history

 

 Dealing with tax is dealing with public money. Addtionally tax has another similarity to money apart from being stuff to pay the grocery bill.

 The money system depends absolutely on the users' perception that the scrap of paper in their hands, or the wizz-bang digital stuff on their computers may, when necessary, be exchanged for a box of cornflakes. 

It is entirely a matter of trust.

In contemporary society (in the UK) we rely on our manager, Parliament, to maintain and reinforce that promise between me and my grocer, that when I give him my bit of paper he will give me a box of sweeties in exchange.

 To the everlasting credit of our forebears, 99.9999% pf the UK population trusts that promise.

  Except for that trust, we would be in a Greek or Zimbabwean situation.

 Similarly the tax system in the UK relies entirely on the trust of the subject that Parliament and or HMRC will act respectably. Despite all the jokes the observable truth is that in fact 99.999% of taxpayers hold this trust, at the moment.

Despite all the grumbles we voluntarily pay our taxes without the need for the heavy mob to come knocking at our door.

 Except for that trust, we would be in a Greek or Zimbabwean situation.

During my accountancy youth, for understandable historical reasons this was so in Italy, France, and Spain.

Otherwise respectable clients thought the English were truly daft to pay their taxes except and unless co-ercion was applied.

 Sufficient members pf parliament, with the executive of HMRC, do not appear to be able to properly value this concept of the need for trust Once this trust is lost it will be almost impossible to regain.

 This week we had the "Marriage allowance" fiasco. Many more similar to this and the house of cards will come tumbling down.

 I am reminded of the ancient audit principle:

 If you find one mistake, test for second.- if no second mistake, fine.

 If you find a second mistake - rigorously test for third- if no third mistake - fine, note it and move on

 If you find a third mistake- Assume that the system is defective (Polite word)

 Anybody out there prepared to give the UK tax administration a clear audit certificate?

 

 

 

 

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By David Gordon FCCA
09th Jun 2015 12:05

Where do you start

 

 I do not refer to who should pay and how much they should pay, I refer solely to the legislative process:

The principle governing current tax legislation appears to be:

Add a rule for every nit you find in the system.This is not constructive. This because the more rules you make the more holes you leave for nits to hide in.

 In the days BC (before computers) I was taught there was rule that any transaction entered into solely for the purpose of avoiding tax, with absolutely no other commercial benefit, was not a tax allowable transaction. So, if you just have that one rule, under English Common Law principles, you build up a body of precedent which will quickly sort out the do's and don'ts.

 I guess that one rule would take care of 75% of questionable tax planning. It would also cut the rule book by x thousand pages.

 It would for a start, take care of the transfer pricing dodge. If Megacoffee Cafe corp is showing £20 for 250 gm coffee in its acs when the price in Tesco is £5- Tain't allowable.

 A correspondent mentioned "Expert tax officers". Where? How many poachers turned gamekeeper has HMRC hired? (Not many- thank God) 

 HMRC in the interests of security has divided itself up into tight separate compartments, so that it is almost impossible to get an HMRC officer to view a taxpayer's affairs as a "Whole".

 Worse, one department shall not be able to contact another. Debt Management are you listening?

 Further Members of parliament regard (Sorry ladies) the making of tax rules as proof of the length of their private parts. Except that if they knew about their private parts only as much as they know about tax administration, they would all have to wear nappies.

 If parliament in an act of saintly self-denial froze the making of tax legislation for three years, and instead concentrated on the proper use of what we already have, we would not need any more legislation.

 last but not least, similar to all dodgy software companies, HMRC is constantly covering the shortcomings of unfathomable software by publishing oceans of "explanatory books, emails, and online explanations. HMRC must now be one of the largest publishers of non-fiction (?) in the UK.

 Instead, why not use that money towards  getting a correct working system in the first place?

 Last but not least- how do they work out the value of the "Black" economy?

 Having spent only five decades in the profession I am not yet able to understand these numbers.

 

 

 

 

 

 

 

 

 

 

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Replying to Cheshire:
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By Ken of Chester le Street
10th Jun 2015 10:46

Sorry Ladies.

I can't quote all Mr Gordon's excellent comment, but would just refer to his comment:  Further Members of parliament regard (Sorry ladies) the making of tax rules as proof of the length of their private parts

In the days of shorthand and notebooks made of paper . c 1975, I was dictating a letter about the capital gains on a house used partly for residential and partly business:

Me: The parts of the building used for business will attract capital gains tax , but there will be no tax on the private parts. 

Secretary: I wonder if we should rephrase that?

Not really  germane to the discussion, but I think a bit of light relief is occasionally helpful. 

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By johnjenkins
11th Jun 2015 15:17

@OGA

Did you say "I am the lurr" (said in a clumsy french accent).

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By The Black Knight
11th Jun 2015 15:23

be fair to the man

he was still punch drunk from Rocky 5

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By listerramjet
12th Jun 2015 09:35

tax policy

@David Gordon - really don't think Tesco's pricing practices should form the basis of any sort of public policy!

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By David Gordon FCCA
12th Jun 2015 10:18

dear lister

 

 True, but Tesco's pricing policies have the inestimable merit of being available for scrutiny.

 Also, as we have seen in the recent past, if Tesco's or similar get it wrong - the great British public are able to, and do show their displeasure.

 Ask the smiling faces at Aldi or Lidl.

 When you deal with HMRC do you feel similar to a "Customer"?

 

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