Day 11: 12 days of Xmas

Generali

Penultimate question.

[FONT=&quot]According to the UK Government, how much tax was avoided in 2015? (FWIW, I do not believe this figure for a moment and will try to look up their definition).[/FONT]

GunJack

too much??

mayonnaise

£63,000,000,000.00

wotsthat

It's going to be massive so the government can spend, in advance, the money they say they'll take by reducing avoidance.

Generali

wotsthat wrote: »

It's going to be massive so the government can spend, in advance, the money they say they'll take by reducing avoidance.

You'd imagine but actually the number is so small as to be ridiculous. Perhaps 1% on the basic rate of income tax.

HappyMJ

Generali wrote: »

Penultimate question.

[FONT=&quot]According to the UK Government, how much tax was avoided in 2015? (FWIW, I do not believe this figure for a moment and will try to look up their definition).[/FONT]

Avoided is a word that I don't really like. I avoid paying tax. I don't pay very much tax at all. I pay zero income tax and do not pay any National Insurance contributions. I've set my company up to pay me a certain salary which credits me with National Insurance contributions for free. I then take the excess profit out of the company as dividends. Is that avoidance or tax minimization?

Is putting savings into ISA's tax avoidance for those that can afford it? There's normally tax to pay on interest and dividends but put your investments in an ISA wrapper and you can avoid tax.

Is letting out a property and paying interest on a mortgage claiming that as an expenses against rent tax avoidance on the rental income? Government is changing that one so it must have been avoidance in the past.

Is contributing to a pension to get tax relief then drawing the pension as a tax free lump sum tax avoidance or just a loophole?

antrobus

Generali wrote: »

You'd imagine but actually the number is so small as to be ridiculous. Perhaps 1% on the basic rate of income tax.

I think it's smaller than that. More like 0.5%.

But I think HMRC uses a narrow defintiion of 'avoidance' that only covers the kind of things that HMRC could do something about if they knew about it. So it doesn't encompass things they can't do anything about; such as trading through a Luxembourg entity.

I can always Google it for you if you like.:)

Generali

Given the answer there is no way that pensions and ISAs can be included.

I've [STRIKE]had a quick squizz[/STRIKE] researched extensively and can't find HMRC's definition of tax avoidance.

It's clearly balderdash.

Generali

antrobus wrote: »

I can always Google it for you if you like.:)

Please do. I'd be interested to know the answer to the not-question, being the definition of 'avoidance' in HMRC's fantasy land.:)

Answer to follow in my morning. Hopefully we'll have the Saffas bowled out by then too.

antrobus

Generali wrote: »

Please do. I'd be interested to know the answer to the not-question, being the definition of 'avoidance' in HMRC's fantasy land.:)....

Since you insist.:)

Avoidance is exploiting the tax rules to gain a tax advantage that Parliament never intended. It often involves contrived, artificial transactions that serve little or no commercial purpose other than to produce a tax advantage. It involves operating within the letter but not the spirit of the law.

It does not include international tax arrangements like base erosion and profit shifting (BEPS), which will be tackled multilaterally through the Organisation for Economic Co-operation and Development (OECD). The OECD defines BEPS as “tax planning strategies that exploit gaps and mismatches in tax rules to make profits disappear for tax purposes or to shift profits to locations where there is little or no real activity but the taxes are low resulting in little or no overall corporate tax being paid”.

Where we can challenge cross-border tax avoidance or aggressive tax planning under UK law, it is reflected in the tax gaps for avoidance and legal interpretation, but where the effect of such activity is the result not of frustrating UK law but of exploiting the international tax framework, we do not include it in the avoidance tax gap. Tax avoidance is not the same as tax planning. Tax planning involves using tax reliefs for the purpose for which they were intended. For example, claiming tax relief on capital investment, saving in a tax-exempt ISA or saving for retirement by making contributions to a pension scheme are all forms of tax planning.

Measuring tax gaps 2015 edition
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/470540/HMRC-measuring-tax-gaps-2015-1.pdf

Generali

Cheers antrobus. The stuff I could find was from the coalition and the gov.uk website seems keen to show that coalition produced numbers are not to be considered current in any way or indeed to be considered concurrent with the series produced under the Tory Government in many cases.

Hope you're enjoying the quiz.