Cameron - tax avoidance morally wrong

lostinrates

Itismehonest wrote: »

I think this is the problem.
However, for the self-employed there has to be a valid way of off-setting various allowable costs & losses or we could get to the stage where only the mega-rich self-employed would have any "income" at all.

Some people are both. Without dh's paye income we could not afford to be setting up the lir business.

Which reminds me, i must write an advert soon....need more income.

MoneyGeoff

michaels wrote: »

I'd like to think if I was earning over 100k I would think I have enough and not try to 'actively avoid'...

£100k is an interesting amount because that's where you start to lose your allowance.

Suppose after pension contributions your gross salary was £105,000. Your net salary in this tax year would be £66,678.

If you paid an extra £5,000 per year into a pension, your net salary would be £64,678. So you'd be £3,000 better off.

Are you saying you wouldn't do that? To actively avoid tax and be £3k better off? I bet you would.

Going4TheDream

Many MP's expenses were 'morally wrong' and even illegal - and what was done about that after the big hoo ha died down?

A few scapegoats, and then brushed under the carpet and business pretty much as usual.

vivatifosi

Heavens, I agree with a Milliband. He said (paraphrasing) don't call it morally wrong, close the loophole.

However I do think Carr's an idiot for criticising Barclays for paying 1% tax and then doing the same himself. Which reminds me a bit of Christine Lagarde saying the Greeks should pay their taxes, after which it was reported she paid no tax. In short, don't criticise others for doing something that you clearly do yourself.

chewmylegoff

The hmrc should just take the "Jimmy Carr" scheme to the tax tribunal and argue that the loans are a sham arrangement- because they clearly are if it is as described.

I think really the line is where you are employing a ridiculously contrived scheme the sole purpose of which is to reduce your tax bill. That is what the K2 scheme sounds like to me.

Wookster

lostinrates wrote: »

I really want to know how to find one of these accountants, ours had us write a cheque to hmrc last year after dh's paye tax income. Loads we thought was legitamately offset able was not.

Much of this comes down to how aggressive you want to be. There are many grey areas and if you're happy to operate in a grey area then you might get away with it, but then again you might lose sleep over the consequences of a negative ruling.

vivatifosi wrote: »

Heavens, I agree with a Milliband. He said (paraphrasing) don't call it morally wrong, close the loophole.

However I do think Carr's an idiot for criticising Barclays for paying 1% tax and then doing the same himself. Which reminds me a bit of Christine Lagarde saying the Greeks should pay their taxes, after which it was reported she paid no tax. In short, don't criticise others for doing something that you clearly do yourself.

Miliband did of course take a pot shot for 'moralising' (and no doubt if I could be bothered to search I'd find a few examples o him calling bankers/ private equity folk immoral).

I do have some sympathy for Lagarde... where is she based do you know?

michaels

I believe they are planning too. I guess the question is - is there a difference between as in the example above paying extra in to a pension to avoid a very high marginal tax rate and coming up with a scheme whereby what is obliviously earnings are treated as a loan in order to avoid paying tax (at probably 47%). I think there is a clear difference.

chewmylegoff wrote: »

The hmrc should just take the "Jimmy Carr" scheme to the tax tribunal and argue that the loans are a sham arrangement- because they clearly are if it is as described.

I think really the line is where you are employing a ridiculously contrived scheme the sole purpose of which is to reduce your tax bill. That is what the K2 scheme sounds like to me.

vivatifosi

Wookster wrote: »

I do have some sympathy for Lagarde... where is she based do you know?

I think hers is an ex-pat salary package, per a thread from Gen a while back. IIRC she's based New York. However try telling someone on the breadline in Greece that its ok for her not to pay tax because its the way her package is structured and you're likely to get shot. That's why it makes issues like these so thorny.

chewmylegoff

michaels wrote: »

Are they available to everyone? Pretty tricky for most on paye to benefit from creative accounting and for most on lower incomes the cost of doing so is probably more than the amount that can be saved.

Of course they aren't open to everyone. PAYE employees can hardly just ask for their salary to be paid to Jersey gross of tax. Furthermore, the arrangement fees to access these schemes are more than most people's annual tax bills.

If you see someone saving say £100k of tax (through a contrived scheme like this), they're likely paying legal / accountancy / trust fees of £20-50k to achieve that saving. Tax professionals are horrifically expensive to employ, but people will pay if they will be better off net. A rich person would pay £1 million to avoid £1.1 million of tax if there was a guarantee of no clawback.

Pretty sure most of the schemes rely on obsfucation and HMRC's lack of enforcement resource to succeed.

lvader

vivatifosi wrote: »

Heavens, I agree with a Milliband. He said (paraphrasing) don't call it morally wrong, close the loophole.
.

And yet milliband and Labour were happy to keep these loopholes open while in power.