Is being a tax avoider socially unacceptable?

Gangaweed

Thrugelmir wrote: »

HMRC challenges tax returns continuously. That's the trouble with media coverage. All noise and lacking in any understanding of an extremely complex matter.

Arrangements such as Starbucks are only illegal if there are other factors in play. Something which is the EU is investigating. Where National Governments have bent rules to their own benefit in colluding with multi national companies.

As far is Starbucks is concerned boycott it. Business will only survive if it has trade.

HMRC does not challenge schemes of multinationals such as Starbucks, Google and Amazon. The're very keen to go for smaller fish such as potentially dodgy film schemes, but the're not going after the big boys.

BobQ

Loughton_Monkey wrote: »

I go out of my way to avoid tax.

Specifically, a couple of shopping trips to France saves me about £3.5K on tobacco, and £2.5K on alcohol, the bulk of which is UK tax.

Then, of course, there is the transfer of assets to Mrs LM's name to avoid higher rate tax, using ISA and Pension Contribution limits to the full.

My latest little manoeuvre involves deferring state pension (thus achieving a 'healthy' 2½% interest rate from the state) for a few years while rampantly drawing down small pension funds to within an inch of higher rate tax. At an appropriate juncture I can scale back the drawdown and grasp the full £40K (say) lump sum all at once without fear of higher rate tax.

Generally, I'm using things that the more hard-up person wouldn't have the means to do. Something you'd be proud of Graham, I'm sure.

In turn, the mega rich can do additional things that I can't do. I don't class that as wrong. HMRC should have the laws changed if they are worried about it.

I cannot fault your logic and I would do much the same. (although you must be buying some very superior gin if it is all for personal use!):)

But I think there is a difference in what you describe and the problem. You are working within the rules of a tax system doing what the Government fully intended that should be allowed to do. The problem is people who do things that are outside of what Government intended but exploit ambiguity in the rules.

It is a difficult boundary to police particularly when tax law is created using the advice of experts who know how to make the rules ambiguous and then advise their clients how to exploit the ambiguous rules they created.

Suppose we employed burglars to advise on how to draft the laws that make burglary a crime and they advised that the law should state that breaking and entering through a window that had a scratch on the glass was not illegal. Then suppose the police stopped prosecuting people who had jemmied and entered houses because they had first scratched the glass. Would people think this was fair?

Creatively using ambiguities in legislation to get round paying tax that government intended should be paid is immoral particularly when the schemes to get around it are generated by the same firms that advise on the tax laws.

Kendall80

Personally I think it essential to pay tax so that crucial services are maintained and those less well-off have a helping hand.


The system is of course manipulated and abused (human nature?) but the actions of the minority should not detract from the essential assistance given to those who need it.

vivatifosi

BobQ wrote: »

But I think there is a difference in what you describe and the problem. You are working within the rules of a tax system doing what the Government fully intended that should be allowed to do. The problem is people who do things that are outside of what Government intended but exploit ambiguity in the rules.

It is a difficult boundary to police particularly when tax law is created using the advice of experts who know how to make the rules ambiguous and then advise their clients how to exploit the ambiguous rules they created.

Good point Bob.

It's the aggressive avoidance at the boundaries that people have problems with.

The government must realise that they have to do something about this, or their decision announced overnight to strip benefits from the obese, and drug and alcohol addicts, who refuse treatment, will seem remarkably punative.

wotsthat

BobQ wrote: »

Suppose we employed burglars to advise on how to draft the laws that make burglary a crime and they advised that the law should state that breaking and entering through a window that had a scratch on the glass was not illegal. Then suppose the police stopped prosecuting people who had jemmied and entered houses because they had first scratched the glass. Would people think this was fair?

Creatively using ambiguities in legislation to get round paying tax that government intended should be paid is immoral particularly when the schemes to get around it are generated by the same firms that advise on the tax laws.

Fairness and morality is being used for political reasons only. In the two examples we end up focusing on the burglar and tax avoider who are acting legally.

The cloud of moral indignation prevents us from asking why, if the government didn't intend the burglar to scratch the window or someone to avoid tax, the rules weren't written so these actions were illegal. Its carelessness in both examples not helped by an overly complicated tax system in the first place.

I'd be more impressed by Ed if he had the balls to say, for example, he was going to change the rules to be clearer. He won't because people and companies could calculate, in advance of the election, what their tax burden may be.

wotsthat

vivatifosi wrote: »

The government must realise that they have to do something about this, or their decision announced overnight to strip benefits from the obese, and drug and alcohol addicts, who refuse treatment, will seem remarkably punative.

That's politics as well. People who don't agree with these benefits changes will create a tangential link to tax avoidance to create some moral indignation.

They're unconnected issues but the government should make sure the rules for both are clear.

It's all rather futile anyway. Even when presented with what appears, at first glance anyway, to be tax evasion the HMRC seems reluctant to prosecute. It's bizarre - if you get caught intentionally breaking the rules just paying the back tax makes it all go away.

http://www.bbc.co.uk/news/uk-31459067

michaels

Prosecuting requires huge amounts of evidence gathering and expensive lawyers to fight rich people who will spare no expense on their defence as they are fighting for their financial lives which will carry on for years.

Whereas punitive fines are quick, easy and bring the cash in...but fail to deter in the same way prison would.

Generali

Gangaweed wrote: »

HMRC does not challenge schemes of multinationals such as Starbucks, Google and Amazon. The're very keen to go for smaller fish such as potentially dodgy film schemes, but the're not going after the big boys.

Companies like Google pre-agree what they do with the tax authorities. The problem lies with the (not British) Governments that pre-agree this stuff with companies.

Transfer pricing and licencing are perfectly legitimate things to do. Agreeing with big companies that if they pay licence fees to your jurisdiction because you'd rather get 1% of something than 40% of nothing stitches everyone else up.

Do you really expect companies to break their fiduciary duty, risking prison in order to turn this down? Perhaps it would be better to ask the Irish, Dutch and Luxembourg authorities why they agreed these deals.

Gangaweed

Generali wrote: »

Companies like Google pre-agree what they do with the tax authorities. The problem lies with the (not British) Governments that pre-agree this stuff with companies.

Transfer pricing and licencing are perfectly legitimate things to do. Agreeing with big companies that if they pay licence fees to your jurisdiction because you'd rather get 1% of something than 40% of nothing stitches everyone else up.

Do you really expect companies to break their fiduciary duty, risking prison in order to turn this down? Perhaps it would be better to ask the Irish, Dutch and Luxembourg authorities why they agreed these deals.

My understanding is that while there might be a TP arrangement with one jurisdiction, that does not preclude another jurisdiction from reaching its own conclusion as to what profit is derived where. Starbucks appears to be the classic case - coffee is sold intra group at least twice before it lands in the UK, meaning it is sold to a UK entity at a fairly high price. HMRC could argue that this is not an arms length transaction and could go on to test that in court if they disagreed with Starbucks but they don't and as a result companies do more and more outlandish things.

Its a bit like MPs expenses, if you apply rules in a lackadaisical manner don't be surprised when folks take advantage.

This was particularly bad under Blair's government during the so called prawn cocktail offensive and appears to have been carried on by the coalition.

wotsthat

michaels wrote: »

Prosecuting requires huge amounts of evidence gathering and expensive lawyers to fight rich people who will spare no expense on their defence as they are fighting for their financial lives which will carry on for years.

Whereas punitive fines are quick, easy and bring the cash in...but fail to deter in the same way prison would.

Interesting though that even the politically correct BBC feel safe in branding the chap in the article a tax evader and tax cheat. Accusing someone with a ton of money of criminal activity is quite ballsy especially when the HMRC decided the case didn't warrant a prosecution.