Tax evaders cost country more than benefits

[taxman 12]

That is perhaps why our tax revenues aren't as high as they should be. Those supposedly collecting taxes lack imagination.

It is folks who are on minimum wage who are moonlighting and doing jobs cash in hand. That is illegal activity. Employing an accountant to look after your affairs isn't, and it is a legal requirement if you work as a limited company with a reasonable turnover.

 

And that is tackled by the Hidden Economy Groups, the anti evasion groups etc etc

 

Avoidance is different, but it still represents an attack on the exchequer and is therefore still tackled by HMRC's anti-avoidance group.

 

Are you suggesting HMRC should not bother in closing the loopholes that lead to tax avoidance?

[taxman 12]

Indeed, but as you say - 'will seek' - they are legal for now and that kind of legislation will probably have trouble being sanctioned.

 

I don't dispute that there are loopholes now which are legal but not moral. Since changing to running y own company I have been quite amazed at the options I have for legally avoiding tax.

 

In some instances yes. Disputes over avoidance measures can take years to resolve, but that's the job of policy makers, courts etc to determine.

[ricgem2002 11]

Did someone mention my name?

 

If people paid what they should rather than evade and avoid then there would be no need for people like me.

 

Looks like I've got a job for life.

not a lot of use to the paye workers then are you . when are people going to get it into their heads that a privilege few make it worse for the majority of the rest:huh:

[speedbirdone 10]

Yes.

 

If there is a liability, which is due, and an avoidance measure is taken to reduce that liability then there is a loss. That's why HMRC and the Government try to crack down on avoidance, they don't do it for no reason.

 

"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."

 

Yeah but if a person uses a totally legal avoidance method then they where never liable for the tax, so how can it cost the country something its not entitled to in the first place. How can avoidance be a threat, people are useing methods that are totally legal. Do you pay more tax than you are legally requied too.

 

What actually can the taxman do to people useing avoidance methods. If for example i used a totally legal avoidance method to reduce my tax bill, would the taxman come after me demanding i pay up the amount i avoided. Your either required to pay it or not.

Edited September 21, 2011 by speedbirdone

[ricgem2002 11]

Indeed, on another thread we discussed mechanisms where IT contractors for example could avoid tax.

 

Consider this:

 

http://www.contractoruk.com/bn66/it_contractors_offshore_scheme_born_to_avoid_tax.html

 

People were basically paying 3.5% income tax but no doubt expecting everybody else to pay for the public services they were using.

 

What makes me curious is how, when anybody questions on here why that kind of thing might be wrong the reaction is usually very hostile.

so are you against this ?

[I1L2T3 10]

so are you against this ?

 

Yeah. Why wouldn't I be?

[I1L2T3 10]

Yeah but if a person uses a totally legal avoidance method then they where never liable for the tax, so how can it cost the country something its not entitled to in the first place. How can avoidance be a threat, people are useing methods that are totally legal. Do you pay more tax than you are legally requied too.

 

What actually can the taxman do to people useing avoidance methods. If for example i used a totally legal avoidance method to reduce my tax bill, would the taxman come after me demanding i pay up the amount i avoided. Your either required to pay it or not.

 

Yes they can come after you, in theory. In practical terms what tends to happen is the bit of the tax framework that caused the avoidance to be possible is tightened up, preventing that avoidance measure being used any more.

 

It works like this:

1. A tax adviser/accountant dreams up a tax avoidance scheme

2. They put it into operation

3. Within days of putting it into operation that have to register it with HMRC compliance

4. They get a registration number for the scheme

5. They can use that number to give some confidence to the scheme users that it is a registered scheme

6. At some point HMRC will assess the scheme

7. HMRC might deem it to be not in the spirit of the law or maybe even against the law. In either of those cases they will initiate action to prevent the scheme being used again. At that point HMRC may chase scheme users for back payments of tax avoided (or evaded if the scheme was illegal)

 

A registration number is not proof that the scheme is legal. There will be a lot of people using these kind of schemes in good faith and who will get a nasty shock at some point.

 

Contractors at work have called these "save now, pay later" schemes.

[ricgem2002 11]

Yeah. Why wouldn't I be?

yet think its ok for the rich to avoid paying tax

[speedbirdone 10]

Yes they can come after you, in theory. In practical terms what tends to happen is the bit of the tax framework that caused the avoidance to be possible is tightened up, preventing that avoidance measure being used any more.

 

It works like this:

1. A tax adviser/accountant dreams up a tax avoidance scheme

2. They put it into operation

3. Within days of putting it into operation that have to register it with HMRC compliance

4. They get a registration number for the scheme

5. They can use that number to give some confidence to the scheme users that it is a registered scheme

6. At some point HMRC will assess the scheme

7. HMRC might deem it to be not in the spirit of the law or maybe even against the law. In either of those cases they will initiate action to prevent the scheme being used again. At that point HMRC may chase scheme users for back payments of tax avoided (or evaded if the scheme was illegal)

 

A registration number is not proof that the scheme is legal. There will be a lot of people using these kind of schemes in good faith and who will get a nasty shock at some point.

 

Contractors at work have called these "save now, pay later" schemes.

 

 

I was thinking more along the lines of tax avoidance schemes that are currently legal with the tax office knowing that there are totally legal, not some flash accountant dreaming up something in the hope that it might turn into a legal avoidance method.

 

There must be plenty if legitimate tax avoidance methods out there that the taxman hasnt shown any intrest in tightening up on and not just ones dreamed up by a tax accountant.

 

Its this spirit of the law i find odd, your either allowed to do it or your not.

Edited September 21, 2011 by speedbirdone

[I1L2T3 10]

yet think its ok for the rich to avoid paying tax

 

No I don't think that.

[I1L2T3 10]

I was thinking more along the lines of tax avoidance schemes that are currently legal with the tax office knowing that there are totally legal, not some flash accountant dreaming up something in the hope that it might turn into a legal avoidance method.

 

There must be plenty if legitimate tax avoidance methods out there that the taxman hasnt shown any intrest in tightening up on and not just ones dreamed up by a tax accountant.

 

Its this spirit of the law i find odd, your either allowed to do it your not.

 

Well, anything that is legal and being used in the way intended is probably set up that way because it provides commercial or economic benefits.

 

As for the spirit of the law in the link I posted earlier the HMRC position was that for the scheme "The arrangements had no genuine commercial purpose". I guess if a genuine commercial purpose could have been demonstrated then the avoidance scheme would have been allowed to continue. So there was nothing illegal happening but the arrangement ran counter to the way the law was intended to work, presumably because it was causing a net loss.

 

There just isn't a valid argument that because it is legal it must be ok in this area because HMRC can deem legal schemes not to be ok and stop their use.

[ricgem2002 11]

Well, anything that is legal and being used in the way intended is probably set up that way because it provides commercial or economic benefits.

 

As for the spirit of the law in the link I posted earlier the HMRC position was that for the scheme "The arrangements had no genuine commercial purpose". I guess if a genuine commercial purpose could have been demonstrated then the avoidance scheme would have been allowed to continue. So there was nothing illegal happening but the arrangement ran counter to the way the law was intended to work, presumably because it was causing a net loss.

 

There just isn't a valid argument that because it is legal it must be ok in this area because HMRC can deem legal schemes not to be ok and stop their use.

or could it be that the little people jumped on the bandwagon to save a few quid and the rich didnt like it so got it stopped . isnt it wonderful how the courts see fit to again punish the less well off:huh: