Reply to: Effective solution to tax evasion aka "avoidance"

[SupremeSpod]

They shouldn't if they adopt, inevitably, my idea.

As things stand now though the only weapon HMRC has got is to use FUD - Fear Uncertainly Doubt by striking down schemes after few years of running in order to deter new schemes.

Clear rules would be nice, but they can't be devised with tax system full of exceptions - if there was single income tax regardless if where money is made, how they are made etc - just pay X% on your worldwide income (if you are British citizen) or go to jail, then it would be very clear.

And that dear boy is why what they are doing is against our human rights.

[Doggy Styles]

Legal loopholes

You don't understand. The Legislature makes the law and it is the role of the Judiciary to interpret Parliaments intentions in circumstances where there is ambiguity.

Sorry, by legal loopholes I was referring to loopholes in legislation. Whether the judiciary interpret them for parliament's intent or not, they are still there and need interpreting.

[Incognito]

Dispatches program a couple of weeks ago on Cabinet Ministers Wealth Management strategies - can be watched here - stick to these and you should be OK.

Gideon (aka Cameron's fag) - stands to avoid IHT on £4m via use of Family Trust Scheme.

Phillip Hammond (Transport Sec) - shifting shares to his wife / income splitting

Andrew Mitchell (Intl Devt Sec) - investing in British Virgin Islands based PIFs.

I haven't watched it all but I'll be having a lookm to make sure I'm not missing any tricks.

They're politician's, what do you expect.

[Alf W]

Dispatches program a couple of weeks ago on Cabinet Ministers Wealth Management strategies - can be watched here - stick to these and you should be OK.

Gideon (aka Cameron's fag) - stands to avoid IHT on £4m via use of Family Trust Scheme.

Phillip Hammond (Transport Sec) - shifting shares to his wife / income splitting

Andrew Mitchell (Intl Devt Sec) - investing in British Virgin Islands based PIFs.

I haven't watched it all but I'll be having a lookm to make sure I'm not missing any tricks.

[Incognito]

Well if Rangers FC are anything to go by, they seem inclined to drag their heels.
Still, everything to he who waits, eh Incog?

They never got Pompey, they won't get us.

The Rangers tax case is something to do with EBT's. Quite how that one pans out is going to be quite interesting, because I'm sure we all know a lot of contractors using EBT's as well.

Huge tax bill 'could saddle Rangers with £80m debt' - The Scotsman

[shaunbhoy]

Tax avoidance is prudent, however, it seems that we now have varying levels of tax avoidance with HMRC willing to act against 'aggressive' tax avoidance. In other words, using artificial arrangements to attempt to reduce your tax burden

Well if Rangers FC are anything to go by, they seem inclined to drag their heels.
Still, everything to he who waits, eh Incog?

[Incognito]

No No No!

The government should be clear about the rules. If this new coalition don't like the old rules they can change them for the future. If there is abiguity then that is their fault for not thinking it through and making the intention clear in the first place.

Quite right. Gordon doubled the number of rules, and his additions are so badly drafted there are legal loopholes and lack of clarity all over the place.

You don't understand. The Legislature makes the law and it is the role of the Judiciary to interpret Parliaments intentions in circumstances where there is ambiguity.

Statutory interpretation - Wikipedia, the free encyclopedia

HMRC's argument in BN66 is that the Double Taxation Treaty loophole was closed off after Padmore with the legislation that was introduced. It was Parliament's intention at the time to stop people exploiting this loophole, it doesn't make a difference if you've found some clever all singing, all dancing scheme that isn't mentioned explicitly in the statute, it is still serving the purpose of circumventing the will of Parliament and that's one argument they'll lose in a UK court every time.

And as others have said, tax avoidance is prudent.

An ISA isn't an artificial scheme, everyone is allowed to subscribe to an annual ISA to reduce their tax burden. Creating a company in another jurisdiction who's sole purpose and reason is to exploit an arrangement between sovereign states is artificial. It may not be criminal per se, but it certainly isn't cricket (one for all you public school boys out there).

Tax avoidance is prudent, however, it seems that we now have varying levels of tax avoidance with HMRC willing to act against 'aggressive' tax avoidance. In other words, using artificial arrangements to attempt to reduce your tax burden and yes, IR35 was an attempt to reduce ‘aggressive’ tax avoidance.

[Doggy Styles]

The government should be clear about the rules. If this new coalition don't like the old rules they can change them for the future. If there is abiguity then that is their fault for not thinking it through and making the intention clear in the first place.

Quite right. Gordon doubled the number of rules, and his additions are so badly drafted there are legal loopholes and lack of clarity all over the place.

And as others have said, tax avoidance is prudent.

[cailin maith]

Oh come on CM you don't believe that guff they're coming out with on the Bn66 thread do you?

All the tax return had was a scheme number on it, HMRC still had to work out how it worked. Not every taxman is a tax specialist and schemes like these are quite common and quite complex. They're designed to deceive right from the start.

As far as I've read the majority of them were told from the start that HMRC doesn't accept the scheme works. If that doesn't make you thing twice what does? The bailiff at the door?

I tell you who they should be blaming and that's their scheme provider who even if they do lose the case will still have made a tidy profit out of it.

Thats not quite right though...

1 - Fair enough, the tax offices in general aren't specialists but the initial tax returns were dealt with by the specialist offices so by rights these guys should have known what they were doing.

2 - To get the disclosure number, the providers had to provide a detailed explaination of how the scheme worked to the anti-avoidance unit.

3 - Nobody expected HMRC to wait as long as they did to find (make up!) a flaw with it and then to introduce retrospective legislation to close it down was just plain wrong. Have you any idea how many different arguments HMRC offered up before they finally decided on the one they are using now?

[Jog On]

I don't think you guys are getting it. The distinction between evasion and avoidance, and the idea that avoidance is perfectly legal and will not be pursued by HMRC, is long gone.

Really? There is an entire industry devoted to protecting income from Hector

The "guidance" referred to is a list of "Signposts", i.e. factors in a person's tax affairs that may indicate that avoidance is taking place. Again, no mention of illegal acts, just the categorisation of these behaviours as "unacceptable".

This quote I find interesting:

or providing advice on how to address transactions or arrangements that HMRC may see as unacceptable tax planning

They are going to have to change the law to close the loopholes if they want to stop "unacceptable tax planning" and I don't see the super rich 'allowing' that to happen. Otherwise they're just still threatening, bullying and intimidating - anything new here?

I also think they need to address the core issues of why people - when given the opportunity will opt to pay less tax. Why do people give money away to charity rather than pay it in tax? What is so abbhorant about paying more in tax than you're legally obliged to that makes so many people plan and manage their affairs so as not to?

[Ignis Fatuus]

WTF is "avoidance"?

There's avoidance which is a prudent arrangement of ones affairs and there's evaision which is 2-5 years at her majesty's pleasure and probable financial ruin.

The former is perfectly legal and not morally or ethically wrong. As illustrated in the post by spaceman earlier today - if the rules are deemed to be unfair for the mass majority then the government can change them in the future and the people have the right to alter their affairs accordingly as per the new rules.


What's the problem? The rules are in place and if you break them you pay the consequences.

I don't think you guys are getting it. The distinction between evasion and avoidance, and the idea that avoidance is perfectly legal and will not be pursued by HMRC, is long gone.


See HMRC:
HM Revenue & Customs Anti-Avoidance Strategy

A small minority of HM Revenue & Customs (HMRC) customers continue to engage in tax avoidance, which undermines the delivery of fair tax outcomes. We aim to persuade our customers not to attempt to engage in avoidance by:

- making tax law robust against avoidance
- engaging with our customers about our approach to avoidance
- optimising our operational response to avoidance; and
- changing the economics of avoidance to make it less attractive
so that the expected costs, difficulties and risks of attempting avoidance outweigh the expected potential gains.

Why tax avoidance is a problem for everyone
Her Majesty's Revenue & Customs (HMRC) and HM Treasury (HMT) have a shared objective of minimising the tax gap (that is, the difference between the tax collected and the tax we think ought to be collected). We want to provide our customers with a level playing field while maintaining the UK's international competitiveness. Our strategy for delivering this objective is through encouraging everyone to pay tax at the right time and vigorously tackling those who deliberately avoid their responsibilities.

In the UK the tax loss from avoidance is estimated to run into several billion pounds across both direct and indirect taxes. This directly affects the delivery of public services and long-term economic growth. Avoidance distorts markets, is economically unproductive and breaks the link between economic productivity and reward.

The vast majority of our customers do not participate in tax avoidance and will stand to benefit from HMRC's anti-avoidance strategy. HMRC is taking a proportionate, risk - based approach to avoidance, which is consistent with HMRC's commitment to supporting our customers.

What is tax avoidance?
HMRC's Anti-Avoidance Group (AAG) offers guidance about what factors indicate that tax avoidance may be occurring. It is impossible to provide a comprehensive definition of avoidance - HMRC's guidance describes the sorts of activity that HMRC may perceive as avoidance.

Based on an understanding of HMRC's guidance, our customers ought to be aware when they are undertaking activities that HMRC may regard as tax avoidance and thus taking on higher risks.

Notice that nowhere do they say that it's illegal, but they are very clear that they will come after you for it and make it not worth your while.

Re-read this bit too:

Her Majesty's Revenue & Customs (HMRC) and HM Treasury (HMT) have a shared objective of minimising the tax gap (that is, the difference between the tax collected and the tax we think ought to be collected).

The "guidance" referred to is a list of "Signposts", i.e. factors in a person's tax affairs that may indicate that avoidance is taking place. Again, no mention of illegal acts, just the categorisation of these behaviours as "unacceptable".



Smell the coffee, people: they don't need you to break the law any more, the mere fact of them not receiving enough money is enough to provoke them into coming after you.

[doodab]

The whole system of accountants looking for another loophole after another is perverse - the way to stop this tulip (and it can help reduce general taxation) is to ensure that ANY half-questionable "avoidance" results in saved tax being put into escrow

The way to stop it is to simplify the tax system so that there aren't any questionable measures or loopholes. The current labyrinth is preposterous.

[Incognito]

No. (again)

So, according to your logic, if enough people signed up for ISAs and the government needed access to quick cash they could say that, for example, "actually we didn't mean tax free, we meant you didn't have to pay the tax on the growth each year but you do when you cash it in"?

Also

"I know that's not what the law stated but we're reclarifiying now and applying retrospectivley so cough up"

If the government don't like ISAs thay can cancel them for the future not tax everyone for following the rules they put in place cos they no longer like them.

No (again) because in your example ISA's have quite clearly been legislated for, it is legitimate tax avoidance.

With Bn66 the scheme providers have tried to create a crafty scheme to circumvent something the government had quite clearly legislated against at the time with Padmore. The scheme went against the spirit of the law and whilst people may seem to think if it isn't written down it's not the law, this isn't France and not all of our law is codified.

I don't think they have a leg to stand on with their case, however the PwC argument may have some merit.

[AtW]

It's like Al Capone complaining in court that he was not brought to justice years earlier ... I really need to get that Ze Untouchables movie on blu ray ...

[Incognito]

Bollocks - when they have been given all details in the very beginning? Why should it take 7 years? And in any case 7 years for them to dream up of a reason (a not very good reason at that?!) is total bollocks.

Oh come on CM you don't believe that guff they're coming out with on the Bn66 thread do you?

All the tax return had was a scheme number on it, HMRC still had to work out how it worked. Not every taxman is a tax specialist and schemes like these are quite common and quite complex. They're designed to deceive right from the start.

As far as I've read the majority of them were told from the start that HMRC doesn't accept the scheme works. If that doesn't make you thing twice what does? The bailiff at the door?

I tell you who they should be blaming and that's their scheme provider who even if they do lose the case will still have made a tidy profit out of it.