Reply to: Tax evasion/avoidance

[NotAllThere]

Moved from : http://forums.contractoruk.com/accou...s-clients.html

[Ignis Fatuus]

The myth is that because someone "saves" £5k tax a year by using, let's say, their tax free allowance, that they are somehow cheating the state out of £5k. They're not, that £5k was never owed and does not exist. That's why I'm implacably opposed to IR35 - it is attemtping to force me to pay a tax that isn't owed.

Absolutely. IMHO if there is a "tax gap" between what Parliament intended that their laws would bring in, and what they actually bring in, as a result of people obeying the law, then it is Parliament and not the people who are wrong.

[malvolio]

I think one of the things that dimazigel is saying is that there is not such a clear line between illegal tax evasion and legal tax avoidance as some of us seem to think: specifically, what we think of as legal avoidance might be seen and pursued by HMRC as an activity to be challenged. I think he has something there.

ISTM that HMRC no longer necessarily agree with this appealingly clear definition, that tax avoidance, i.e. taking steps in complete accordance with the law to pay less tax than you otherwise might, is legal.

I refer to Anti-Avoidance Group




HMRC has a helpful 'Spotlights' area:



Elsewhere they speak of ''legal avoidance', suggesting that other forms of avoidance (not evasion) might not be legal.

I have also found (but since lost the URL) on the HMRC site a note to the effect that actions which cause less tax to be collected than Parliament intended will be regarded as avoidance, and challenged.

So it is not enough to act in accordance with the law: you must act in accordance with what was in the minds of the government when they made the law.

While what you say is true, no court is going to rule on what HRC beleive to be the law, only on what the law actually is. This ongoing attack on "avoidance" was starteed by the Gorgon in response to his ttally barking philosophy that only the state knows how to spend your money, so we'll take it all and give you back what we think you need.

The myth is that because someone "saves" £5k tax a year by using, let's say, their tax free allowance, that they are somehow cheating the state out of £5k. They're not, that £5k was never owed and does not exist. That's why I'm implacably opposed to IR35 - it is attemtping to force me to pay a tax that isn't owed.

[Ignis Fatuus]

I think one of the things that dimazigel is saying is that there is not such a clear line between illegal tax evasion and legal tax avoidance as some of us seem to think: specifically, what we think of as legal avoidance might be seen and pursued by HMRC as an activity to be challenged. I think he has something there.

ISTM that HMRC no longer necessarily agree with this appealingly clear definition, that tax avoidance, i.e. taking steps in complete accordance with the law to pay less tax than you otherwise might, is legal.

I refer to Anti-Avoidance Group

Tax avoidance remains a substantial threat to the Exchequer and the AAG has been established to co-ordinate HM Revenue & Customs (HMRC) anti-avoidance activity in a systematic manner.

HMRC has a helpful 'Spotlights' area:

'Spotlights' is all about tax avoidance.

It has a 'consumer protection' role in helping you to avoid unwittingly entering into arrangements that HM Revenue & Customs (HMRC) are likely to see as tax avoidance. It does this by identifying the types of arrangements or scheme which HMRC are likely to challenge. HMRC will do this [...] by providing you with some help to understand how they distinguish between artificial avoidance schemes and ordinary sensible tax planning

Elsewhere they speak of ''legal avoidance', suggesting that other forms of avoidance (not evasion) might not be legal.

I have also found (but since lost the URL) on the HMRC site a note to the effect that actions which cause less tax to be collected than Parliament intended will be regarded as avoidance, and challenged.

So it is not enough to act in accordance with the law: you must act in accordance with what was in the minds of the government when they made the law.

[SueEllen]

In Russian language there is no deference between these 2 words at all

You obviously haven't noticed in your language studies that many languages have words that don't directly translate into another tongue.

So it's a good idea to trust native speakers when they say the words have different meanings.

And it's "difference" not "deference". Those two words also have very different meanings in English.

[d000hg]

Let's face it. We are all hidden employees and everything we are discussing here is how not to pay taxes.

Not true. Maybe in Russia it is a game like that, but in the UK there are well-established rules.

I just checked Google translate. Both words evasion and avoidance translate to Russian to the same word. In Russian language there is no deference between these 2 words at all

Not in English:
Avoid - a legal way to pay less tax, tell the government what you are doing
Evade - hide your income, or otherwise give the government inaccurate information

Bored of this thread now, KC/factgasm back again? Who is having their holiday?

[malvolio]

Sorry if I was understood this way but I wanted to say is that we all might think that we are doing contracting legally and we control everything until judge said that you are personally bloody hidden employee. Let's face it. We are all hidden employees and everything we are discussing here is how not to pay taxes. I just checked Google translate. Both words evasion and avoidance translate to Russian to the same word. In Russian language there is no deference between these 2 words at all

But they don't translate to the same thing in English.

And after 15 years freelance consultancy work I'm bloody sure I'm nobody's employee, hidden or otherwise.

[dimazigel]

No. Tax evasion is a crime - like stealing or murder. Your statement seems to be "it's only illegal if you get caught" - untrue, it's illegal all the time but you only get punished if you get caught.

Sorry if I was understood this way but I wanted to say is that we all might think that we are doing contracting legally and we control everything until judge said that you are personally bloody hidden employee. Let's face it. We are all hidden employees and everything we are discussing here is how not to pay taxes. I just checked Google translate. Both words evasion and avoidance translate to Russian to the same word. In Russian language there is no deference between these 2 words at all

[d000hg]

Avoidance is legal until judge said that you did not have rights to deduct this or that as an expense and called it as an evasion. We are all kind of legal until judge made a decision about you personally.

No. Tax evasion is a crime - like stealing or murder. Your statement seems to be "it's only illegal if you get caught" - untrue, it's illegal all the time but you only get punished if you get caught.

Anyway - I don't have overseas accounts and only have interest in being squeaky clean. Maybe that discussion can be a separate thread... maybe a mod might even split it for us?

[ASB]

Avoidance is legal until judge said that you did not have rights to deduct this or that as an expense and called it as an evasion. We are all kind of legal until judge made a decision about you personally.
There is a Russian saying(I found a translation): Don't count out of prison cell, a begging bowl may come as well (or shorter never say never).

So my thought is contracting is a risky business but it make sense because of the money you can get

Providing you have disclosed you do not end up talking to a judge unless you want to. You go to an allegedly independent tribunal. They may say "fail", this is a civil not criminal matter. It is simply a disagreement about the tax treatment of certain transactions.

Evasion is a criminal matter

[dimazigel]

Clearly
OK. Avoidance is legal, evasion is illegal. You go to jail for evasion.

Avoidance is legal until judge said that you did not have rights to deduct this or that as an expense and called it as an evasion. We are all kind of legal until judge made a decision about you personally.
There is a Russian saying(I found a translation): Don't count out of prison cell, a begging bowl may come as well (or shorter never say never).

So my thought is contracting is a risky business but it make sense because of the money you can get

[malvolio]

Thanks for correcting me. English is not my native language.

Clearly

No matter how would you call this avoidance or evasion, the essence is the same and clear: How not to pay tax. I don't see any difference in your words.

OK. Avoidance is legal, evasion is illegal. You go to jail for evasion.

And of course I think investigators from HMRC are reading this forum to see what these bloody contractors came up with this time. We are all not in the jail yet just because people in the government are not full idiots to command to HMRC "Get them!!!" and ruin all the IT industry in UK

I wouldn't be so sure about that. This is the government that's allowing 30,000 UK jobs a year to go overseas after all. And some of the legislation is just plain vindictive - go read the BN66 thread.

[dimazigel]

Thanks for correcting me. English is not my native language.
No matter how would you call this avoidance or evasion, the essence is the same and clear: How not to pay tax. I don't see any difference in your words.
And of course I think investigators from HMRC are reading this forum to see what these bloody contractors came up with this time. We are all not in the jail yet just because people in the government are not full idiots to command to HMRC "Get them!!!" and ruin all the IT industry in UK

[malvolio]

Common, man. All this forum is about tax evasion. We are all hidden employees. In Australia for instance there is a PSI test, similar to IR35. Their law clearly says. If more than 80% of your company income is from the single client during a year you are hidden employee, that's it. HMRC just plays with us like with immature toddlers, just because no one in the government said: "Get them!!!"

Likely, I'm not a UK citizen. If anything happen like IR35 to me I'll immediately pack my belongings and take the first flight back home. You can't believe, but I was told a story by one UK citizen contractor that 10 years ago he had colleagues from Australia who transferred all the company's money to Australia after 2 years working in UK and moved back without paying any taxes at all.

Come on (sic) man youself. It's about avoidance, not evasion. And because of your friend's shenanigans with UK tax law, we have to put up with IR35 and all the other bollocks that HMRC have saddled us with over the years. Including taxation treaties with Ozland that means your mate can still be prosecuted for UK taxes.

When you actually know what you're talking about, feel free to contribute. Otherwise I should keep your head down: you never know who's reading these boards...

[dimazigel]

So which bit of "Tax Evasion" and "Jail" do you not understand?

Come on, man. All this forum is about tax evasion. We are all hidden employees. In Australia for instance there is a PSI test, similar to IR35. Their law clearly says. If more than 80% of your company income is from the single client during a year you are hidden employee, that's it. HMRC just plays with us like with immature toddlers, just because no one in the government said: "Get them!!!"

Likely, I'm not a UK citizen. If anything happen like IR35 to me I'll immediately pack my belongings and take the first flight back home. You can't believe, but I was told a story by one UK citizen contractor that 10 years ago he had colleagues from Australia who transferred all the company's money to Australia after 2 years working in UK and moved back without paying any taxes at all.