Tax avoidance in the news

[wibbly]

It's the last bastion of the classes... There's no working and middle classes anymore thanks to a certain lady (who shall remain nameless), so they've kept the tax loopholes to keep us serfs in our place

Who'd have thought it eh, Jimmy Carr funny enough to earn millions... there's hope for us all! :shrug:

 

[arclight]

Sorry, I'm very much in the camp that we all contribute financially to society to make things work, including paying for those who have not.

Anything else is the personal greed that leads to the collapse of society - I won't give you examples, but there are plenty both from not so long ago in this country and even today in a nameless ultra rich country.

I think that your opinion is absolutely correct. Unfortunately we seem to have sank to the point where many folk are either personally very greedy or who see means of defeating that. Sort of "If you cannot beat them, join them" syndrome.

 

[srichards]

Panorama did a program about tax. They pointed out that the bulk of the tax take actually comes from the well off. The so called rich that aren't actually avoiding quite a lot of tax. Also if you increase tax rates too much said well off take their wealth elsewhere so take take falls. It is a balancing act.

 

[joescrivens]

i think it's a fair thing to say we'd all try to minimise our tax liabilities as far as possible, who likes paying tax?

but the point is, if we're going to have things we all take for granted, universal healthcare, schools, emergency services and so on we need to pay tax and everyone needs to pay their fair share.

simon above made a point about using childcare vouchers as a method to reduce tax and soften the blow - this is very interesting because maybe if everyone* paid their fair share of tax you wouldn't even have to pay for your childcare directly in the first place as it would be provided by the state as a universal benefit.

the same could also be said of university education and care of the elderly - all things most people believe should be universal benefits are not.

the point is, by not paying tax we're stumping up for all these things that should be universal benefits anyway.

* i'd like to add, the sort of people who that statement refers to are not people like you and i who tried to make our living a bit more comfortable by using government incentive schemes to reduce our tax, but those, like the leaders councils, academy schools and government bodies who use well known tax dodges to get out of paying their fair share of income tax. i like most people are paid using paye and i don't have a choice, and nor should they.

the other thing we as a society needs to accept and swallow is that if we are to expect those with high incomes to pay their fair share of tax, then they also must receive these universal benefits also and we must rid of this culture of means testing everything. we can't expect to have it all ways.

I don't disagree with anything you wrote, but in order for that to work every single person in the country needs to be doing the same thing. Since that doesn't happen it's always going to fail so I'd rather get what I can in the short time I am on this earth and provide as much support and stability for my family. If that means carving more off my tax bill to do it, then so be it.

 

[Richard King]

Let us not forget.. government made the tax system so bloody complicated in the first place. If it was simple... i.e. everyone pays 25% tax no mater what (or whatever), there would be no space for people to do whatever it is they do to minimise their tax burden

The government cant make up the rules, and then complain people follow the rules. To that end, they need to look at themselves

 

[desantnik]

The government cant make up the rules, and then complain people follow the rules. To that end, they need to look at themselves

What you mean and change the way English legislation and Acts of Parliament works?

If you don't understand what I mean, our system is one of saying what you aren't allowed to do (a "blacklist" if you like), as opposed to say how France works where is more of a "whitelist".

Our method allows for easy governance because its less micromanagement, but of course potentially can cause problems when a new technology (usually) comes along that creates scenarios not thought of.

The system works the way it has been designed....

 

[barneyrubble]

Let us not forget.. government made the tax system so bloody complicated in the first place. If it was simple... i.e. everyone pays 25% tax no mater what (or whatever), there would be no space for people to do whatever it is they do to minimise their tax burden

The government cant make up the rules, and then complain people follow the rules. To that end, they need to look at themselves

I completely agree with this. If it was one flat rate across the board it would be so much easier.

In my field contractors have been paying themselves a pittance and then a dividend to reduce their income tax for years. If we made it 25% on all earnings then there could be no avoidance. They average between 14% and 18% income tax.

 

[Rebel t3i]

we pay no tax legitimately on pension investments so sign me up
why would anyone want to give their hard earned money away
There are that many stealth taxes that infact the average man pays in effect 80% tax from some things I have read
The rich will always be rich the poor will always be poor

 

[desantnik]

I don't disagree with anything you wrote, but in order for that to work every single person in the country needs to be doing the same thing. Since that doesn't happen it's always going to fail so I'd rather get what I can in the short time I am on this earth and provide as much support and stability for my family. If that means carving more off my tax bill to do it, then so be it.

Let me know how your personal defence budget is going then, last I heard jets and tanks were really expensive.... and warships...well...

Ok, a tongue in cheek comment, but the problem is that people today don't realise quite how much of what they rely upon is paid for AND CAN ONLY BE PAID FOR by government taxation.

 

[TriggerHappy]

From Jimmy Carr's twitter:

I appreciate as a comedian, people will expect me to ‘make light’ of this situation, but I’m not going to in this statement

as this is obviously a serious matter.

I met with a financial advisor and he said to me “Do you want to pay less tax? It’s totally legal.”
I said “Yes.”

I now realise I’ve made a terrible error of judgement.

Although I’ve been advised the K2 Tax scheme is entirely legal, and has been fully disclosed to HMRC (Her Majesty’s Revenue and Customs),

I’m no longer involved in it and will in future conduct my financial affairs much more responsibly.

Apologies to everyone.

Jimmy Carr

 

[desantnik]

Panorama did a program about tax. They pointed out that the bulk of the tax take actually comes from the well off. The so called rich that aren't actually avoiding quite a lot of tax.

Here's the figures (source HMRC)

In 2010-11, the 26.3 million basic rate (20%) taxpayers paid £67.9bn in income tax, with average personal income tax bills of £2,590

The 3.2 million higher rate (40%) income taxpayers paid £50.7bn, or £16,300 each

And the far fewer 275,000 additional rate payers, charged 50% on their taxable incomes over £150,000, paid £41.4bn. A frankly staggering average of £151,000 each

 

[cuthbert]

i don't disagree with your sentiment either Joe, but there is more to supporting your family than putting food on the table. they need good healthcare, they need good schools and so on and if everybody stopped paying tax or paid the bare minimum what would happen?

either everything would go to rats***, or you'd have to pay for your own kids education privately, your health care privately, etc etc and we know how expensive that would be.

people in public life like jimmy carr and top civil servants live comfortably, there is no excuse for them dodging tax and by doing so they increase the cost of living for all of us because we have to stump up for benefits which really and truly in Britain, in 2012, a progressive society should be universal.

 

[joescrivens]

Let me know how your personal defence budget is going then, last I heard jets and tanks were really expensive.... and warships...well...

Ok, a tongue in cheek comment, but the problem is that people today don't realise quite how much of what they rely upon is paid for AND CAN ONLY BE PAID FOR by government taxation.

I think people do realise it, I don't have an issue paying my taxes. But offer me a way to claw as much back as I can and I'll rip your hand off taking it.

 

[joescrivens]

i don't disagree with your sentiment either Joe, but there is more to supporting your family than putting food on the table. they need good healthcare, they need good schools and so on and if everybody stopped paying tax or paid the bare minimum what would happen?

either everything would go to rats***, or you'd have to pay for your own kids education privately, your health care privately, etc etc and we know how expensive that would be.

people in public life like jimmy carr and top civil servants live comfortably, there is no excuse for them dodging tax and by doing so they increase the cost of living for all of us because we have to stump up for benefits which really and truly in Britain, in 2012, a progressive society should be universal.

its true what you say, but unless everyone does their bit then my contribution is not going to make a single bit of difference, so I'd rather have that money in my pocket.

It's the ones who lead the countries job to herd us all in the right direction. If they did that and everything was the same then I don't think there would be a problem. People who avoid tax legally is the fault of the system, you can't blame people for wanting to have more money in their pockets given the chance.

 

[joescrivens]

From Jimmy Carr's twitter:

I appreciate as a comedian, people will expect me to ‘make light’ of this situation, but I’m not going to in this statement

as this is obviously a serious matter.

I met with a financial advisor and he said to me “Do you want to pay less tax? It’s totally legal.”
I said “Yes.”

I now realise I’ve made a terrible error of judgement.

Although I’ve been advised the K2 Tax scheme is entirely legal, and has been fully disclosed to HMRC (Her Majesty’s Revenue and Customs),

I’m no longer involved in it and will in future conduct my financial affairs much more responsibly.

Apologies to everyone.

Jimmy Carr

Man, that was tough to understand, I think you meant:

I appreciate as a comedian, people will expect me to 'make light' of this situation, but I'm not going to in this statement as this is obviously a serious matter.
I met with a financial advisor and he said to me "Do you want to pay less tax? It's totally legal." I said "Yes." I now realise I've made a terrible error of judgement. Although I've been advised the K2 Tax scheme is entirely legal, and has been fully disclosed to HMRC (Her Majesty's Revenue and Customs), I'm no longer involved in it and will in future conduct my financial affairs much more responsibly. Apologies to everyone. Jimmy Carr.

 

[desantnik]

I think people do realise it

No, I don't think they do....

Here is the HMRC's figures for income:

http://www.hmrc.gov.uk/stats/tax_receipts/tax-receipts-and-taxpayers.pdf

Here are the figures for government spend:

http://www.ukpublicspending.co.uk/total_spending_2011UKbn

For those of you who can't be bothered, the headline numbers are:

£437 billion take by HMRC

verses

£683.4 billion of government spending

(headline items Pensions £122.1 billion, Health Care, £121.3 billion, Education £90.6 billion, Defence £45.5 billion, Welfare £109.5 billion)

Can you see the imbalance? Can you see that really what we should be doing is paying more, not less and how all forms of avoidance should be hunted down with dogs, because whilst even those comedians hiding the odd 3 million, it all adds up - after all, how otherwise do they take £437 billion - thats not all from my pocket!

 

[Richard King]

This hilights what I am saying

The government make the rules
the rules say it is totally legal
If the government or PM are ****ed off about it, they need to go look at the rules

J Carr shouldn't feel it was an error of judgement, or be sorry. His accountant was doing his /her job properly, and he paid the correct amount of tax, according to the rules

Feeling and morals shouldn't come into this. The rules should be right and watertight in the first place

 

[joescrivens]

No, I don't think they do....

Then we can agree to disagree, respectfully

 

[joescrivens]

This hilights what I am saying

The government make the rules
the rules say it is totally legal
If the government or PM are ****ed off about it, they need to go look at the rules

J Carr shouldn't feel it was an error of judgement, or be sorry. His accountant was doing his /her job properly, and he paid the correct amount of tax, according to the rules

Feeling and morals shouldn't come into this. The rules should be right and watertight in the first place

hear hear

 

[cambsno]

i don't disagree with your sentiment either Joe, but there is more to supporting your family than putting food on the table. they need good healthcare, they need good schools and so on and if everybody stopped paying tax or paid the bare minimum what would happen?

either everything would go to rats***, or you'd have to pay for your own kids education privately, your health care privately, etc etc and we know how expensive that would be.

people in public life like jimmy carr and top civil servants live comfortably, there is no excuse for them dodging tax and by doing so they increase the cost of living for all of us because we have to stump up for benefits which really and truly in Britain, in 2012, a progressive society should be universal.

I dont think anyone really minds paying tax to go to eductaion, healthcare, defence, emergency services etc... what people do object to is seeing tax go up year after year to pay billions towards people too lazy to work and want something for nothing, billions to an EU that gives us little or no benefit, hundreds of millions in foreign aid (charity should be an individual action), and various other wastes of our hard earnt cash.

 

[jokeruk]

No, it's not - however, how much of that £683b is actually wasted money? Things wouldn't be anywhere near as bad if the government (and i'm talking whoever is in power) didn't spend so much on stupid ideas/projects etc.

However - something that I don't necessarily agree with (however it's a fact of life like all taxes) is that the higher earners have to pay a higher percentage of tax - they'll already pay more because of higher earnings so why penalise them even more?

Oh, and i'm not in the higher tax bracket before anyone says anything.

 

[Garnett]

It's a staggering suggestion that it is jealousy that causes people to speak out.

It seems a universally agreed tenet that the wealthy should pay at least the same rate of tax as everyone else. No party is suggesting otherwise.

However while the headline rates of 0%, 20%, 40% and 45% would appear to bare this out, in actual fact tax loopholes only available to the wealthy allow them to actually pay a lot less.

I'd bet most people just want them to pay their way.

 

[cambsno]

This hilights what I am saying

The government make the rules
the rules say it is totally legal
If the government or PM are ****ed off about it, they need to go look at the rules

J Carr shouldn't feel it was an error of judgement, or be sorry. His accountant was doing his /her job properly, and he paid the correct amount of tax, according to the rules

Feeling and morals shouldn't come into this. The rules should be right and watertight in the first place

Correct, forgot to add, millions of us avoid tax in the form of ISAs too - the government ENCOURAGE tax avoidance!

 

[srichards]

Or they could not spend so much and *live within their means* like everyone else has to!

How much do they waste on failed IT contracts? EU rubbish? Foreign aid to dodgy countries?

The only way out of the mess we're in is sustained economic growth to produce the amount of money required to balance the budget. Until then there have to be cut backs on non essential spending. Directly buying services you want might be the only way out of as soon as you involve governments into things they start procuring expensive contracts and paying loads more for everything. Vernon Colman wrote some very interesting stuff about the disgusting amount of waste in the NHS that went on.

Everyone is getting squeezed. You have to cut back when there isn't sufficient income to support the life you want.

Corporations are dodging 25BN in tax. How does that compare to the other tax dodgers?

 

[TriggerHappy]

I assume now Jimmy Carr has changed how he runs his finances, Cameron will now go after members of his own cabinet and those who fund his party who avoid paying tax?

To be honest, I don't have a problem if people are going to use legal methods to pay less tax. What I do object to is the hypocrisy of Cameron to slate Carr when so many others are 'guilty' of the same. You're the PM, if you have a problem with it change the legislation to close the loop holes that make it possible and make damn sure your own house is sparkling clean before you criticise others.

The cynic in me says that, being the exceptionally good PR man that Cameron is, there's probably something else more news worthy going on which he's attempting to deflect attention from.

 

[Laudrup]

No, I don't think they do....

Here is the HMRC's figures for income:

http://www.hmrc.gov.uk/stats/tax_receipts/tax-receipts-and-taxpayers.pdf

Here are the figures for government spend:

http://www.ukpublicspending.co.uk/total_spending_2011UKbn

For those of you who can't be bothered, the headline numbers are:

£437 billion take by HMRC

verses

£683.4 billion of government spending

(headline items Pensions £122.1 billion, Health Care, £121.3 billion, Education £90.6 billion, Defence £45.5 billion, Welfare £109.5 billion)

Can you see the imbalance? Can you see that really what we should be doing is paying more, not less and how all forms of avoidance should be hunted down with dogs, because whilst even those comedians hiding the odd 3 million, it all adds up - after all, how otherwise do they take £437 billion - thats not all from my pocket!

It wouldn't be wise for a party to hunt down your largest donors, else they might find their next contributions lost in the post. The very rich should pay more tax.

 

[jokeruk]

However while the headline rates of 0%, 20%, 40% and 45% would appear to bare this out, in actual fact tax loopholes only available to the wealthy allow them to actually pay a lot less.

I'd bet most people just want them to pay their way.

Indeed, charge them the same percentage as the lower earners, but close the loopholes.

Probably end up generating more revenue that way.

 

[mark richards]

the problem is that celebs will probably move abroad...

 

[jokeruk]

Half of them do anyway!

 

[Laudrup]

I dont think anyone really minds paying tax to go to eductaion, healthcare, defence, emergency services etc... what people do object to is seeing tax go up year after year to pay billions towards people too lazy to work and want something for nothing, billions to an EU that gives us little or no benefit, hundreds of millions in foreign aid (charity should be an individual action), and various other wastes of our hard earnt cash.

I remember the story of the MOD paying £22 quid for lightbulbs you could buy for 65p and £103 quid for a £2.50 metal screw. They make the bankers who wrecked the economy look shrewd. No point blaming people on the dole the vast majority of which want a job.

 

[jokeruk]

Indeed, one government agency (and I know this for a fact cos my missus works for them) *used to* spend at least ten times more than the 'normal' person for blank dvds for CCTV usage.

Multiply that by all sorts of products, multiplied by however many different agencies and you've got an awful lot of wasted money.

 

[cuthbert]

I dont think anyone really minds paying tax to go to eductaion, healthcare, defence, emergency services etc... what people do object to is seeing tax go up year after year to pay billions towards people too lazy to work and want something for nothing, billions to an EU that gives us little or no benefit, hundreds of millions in foreign aid (charity should be an individual action), and various other wastes of our hard earnt cash.

there is no question, there is a lot of public money that is spent poorly because there is no accountability for it.

i work in the public sector and i can tell you that some of the pet projects that tax payers money gets thrown at and wasted is criminal.

some of the long term contracts some public sector bodies get tied into i think boarder on fraudulent, these issues need to be ironed out for sure.

but the other point you mention is much harder to pin down and solve; if you and your wife/partner suddenly both became unemployed do you not think it should be the role of the state to come in and give you a crutch in your time of most need to get you back on your feet? or should you be chucked out on the street with no home?

it's a double edged sword. many of those on benefits are out of work because they are unemployable, they have poor education, criminal records, substance addiction problems and so on. what happens to our society if we just forgot them and left them on the streets? would our country magically become a fantastic place? or would we see a return to civil unrest, riots, vandalism, and burglary and robbery from people like you and i? and what about the children of these families that have no choice? they are in the situation they are in because of, for want of a better term an accident of birth? do they not deserves a chance and leg up from the state?

there is no way that it can be justified that tax payers money be spent on sky tv, iphones and other luxury items and this should not be allowed to happen, but i think everyone in this country deserves a basic standard of living and it is the role of the government to incentivise people obtain this on their own put to provide it to the less fortunate when necessary.

 

[ziggy©]

I dont have a problem with what he is doing. Its just a tax avoidance scheme which is not illegal. There is no difference in what he has done compared to many contractors who are not on PAYE who claim on everything they purchase (home computers, lunch etc). The only difference is the amounts involved.

The only problem with these tax avoidance scheme is that they are structured unfairly i.e. only certain people can do it. It would have been fair if every one was able to do it and there were no specific rules for specific employee "types" (i.e. contractors, self employed etc).

As an example, because i am on PAYE, i have to pay for fuel to drive 500 miles a week to get to work. My colleague who also travels around 500 miles a week to get to work (to do the same job) and who earns more than me can claim mileage for the same distance because he is a contractor/self employed. The rules should be the same for all.

I also dont agree with the scheme where celebrities/wealthy individuals pretend they run charity organisation or give to charity where in actual fact it is just another tax avoidance scheme. Giving to charity should come from your heart not as a result of a suggestion from your accountant.

Even though i dont agree with some of the methods being used for tax avoidance i dont have a problem with them at all. If the loophole is there and it is not illegal i will use it if i could. Saying that this is morally wrong is the same as saying that driving a Toyota prius is morally wrong because you are avoiding to pay road tax or you pay less tax on fuel.

It is the government's responsibility to close these loopholes but of course they wont do it because these loopholes are used mostly by people in their circles. They will talk about it and mourn about it to pretend that they care but i bet you nothing will be done about it because they will loose the most.

 

[neil_g]

i say fair play to carr, i think its outragous that he's had so much abuse on this and as a result has now apologised.

if i could pay less tax i would jump at the chance.

 

[srichards]

Best way to pay less tax is to earn less

 

[cambsno]

but the other point you mention is much harder to pin down and solve; if you and your wife/partner suddenly both became unemployed do you not think it should be the role of the state to come in and give you a crutch in your time of most need to get you back on your feet? or should you be chucked out on the street with no home?

QUOTE]

I agree, I think there should be help, like up to 1 years benefits at the salary earnt based on your last P60 - but after a year enough is enough.

Kids today are being bought up by parents who have never worked, yet know the system so have a nice council house, sky, smoke and drink etc... they will do exactly the same and you know what, part of me at times does think who is smarter? I could have had kids in my early 20s, and basically spent all my life at home with them! Ok, would not be able to afford 2.8 lenses but I would have got by.

For example, I hope to save enough in my life to retire and live comfortably. But if i live too long the savings will have to go on nursing home care and my house sold to pay for that, whereas people who havent saved get the care for free!!!

Sorry, but if you are unemployable then thats down to you to sort, although people with GENUINE issues should be looked after.

 

[shogran]

Anyone seen this? Jimmy Carr: My terrible error http://www.bbc.co.uk/news/uk-politics-18531008

 

[srichards]

More succinct:

http://3.bp.blogspot.com/-Tpsju1uJiws/T-L_Ebbwh0I/AAAAAAAAAXM/YQ4ffrSSYFw/s1600/Jimmy.gif

and that's just for vodafone, never mind the others!

 

[neil_g]

I agree, I think there should be help, like up to 1 years benefits at the salary earnt based on your last P60 - but after a year enough is enough.

if i remember rightly you get 6 months job seekers allowance based on your NI payments. and then after that you get reassessed. which isnt much use anyway as if your partner has been on £250/month for 6 months youre finanacially screwed already then they turn around at the end of the 6 months and say the earning partner should be able to support the pair of you on their salary without even looking at their outgoings.

(can you tell its not my favourite topic..)

 

[MatBin]

One of the things I dont get when discussing tax burdens and who should pay what and how much is why when someone works hard, say does a lot of overtime at work, or goes to college whilst still at work to get a better paid job ends up paying at 40% because they have done well for themselves. Why should they pay a greater % than someone on less money, do they have less financial burden? They could supposedly setup a Ltd Co and pay dividend at 20% (or thereabots) but then if they break the income allowance 40% barrier they will still have to pay additional tax over the 20% Corp Tax they have already paid and then of course if they should find themselves out of work they will receive little or no financial help because they are Directors, so that really is a fair system. They will (or would have) additionally paid for their childrens education at Uni, based on their income meaning they didint get the full student loan (which has to be paid back anyway) then of course they probably supported their offspring further after Uni so they could get a decent tax paying job (instead of lazing around etc). Of course they might well support aged parents also. All of this because they dont pay a fair-share of the tax bill?

And anyway answer this further question, these so called non taxpaying thieves, what do they do with their money (generally), sit on it or spend it?
Maybe because they are out working all the hours God sends they employ someone to do stuff for them, gardening, car maintenance, decorating or maybe Heaven forbid wedding photography, all that would dry up, people would be put out of work and they would rely on Govt handouts/benefits, very tax efficient.

I'd let more people keep more of their money but make sure they purchased (rather than saved) stuff to keep others in work and to re-float the economy. They will pay tax on what they spend anyway, whether it comes direct from PAYE or indirect it makes little difference but allowing "wealthy" people to keep a local economy bouyant is a heck of a lot more efficient than any Govt subsidy which has to be collected, administered and distributed, all of which are not efficient ways of getting money into the economy.

Whether people keep their income at a high or low percentage makes little difference in real terms because as soon as you spend it you are paying tax again on the purchased items be they goods or services, basically virtually all of what you earn the Govt gets a huge percentage of and highlighting a particular individuals way of paying their burden just deflects from the real facts.

We are all paying way too much, all Govts waste huge amounts of money with re-inventing the wheel and continual changes to way the things work just for some idealogical reason. Schools, the NHS, Policing etc this lot are changing what the last lot did and the next lot will do the same, wasters (litterally) all of them.

Now, where's my soapbox.