Thursday 25 September 2008

Gone Fishing

Gone Fishing
Accountancy Age reports that HMRC's investigation into offshore accounts, now covers up to 80,000 individuals suspected of using offshore bank accounts to avoid paying UK tax.

A good sized haul of fish to wade through.

Seemingly HMRC have mounted this massive fishing trip, because they are desperate to have a criminal prosecution.

The trouble is as Bob Brown, global leader for tax and investigations for Ernst & Young, says:

"The quality of information [on offshore accounts] is not as good as they thought and they lack enough experienced investigators to run with this."

Would it not therefore be better to cut one's cloth according to one's girth?
Tax does have to be taxing.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

4 comments:

  1. Surely you should be pleased, Ken! According to the Accountancy Age article, these are people suspected of having used offshore accounts to "avoid UK tax". You keep saying avoidance is legal.

    ReplyDelete
  2. ... he's right too!

    HMRC need no excuse to screw the average hard working man.

    The entire system is a incomprehensible farce... nothing an expensive slogan wouldn't fix though, eh?

    ReplyDelete
  3. The tax affairs of "the average working man" and woman have nothing to do with tax avoidance. Using things like ISAs and personal allowances is not avoidance under any sensible interpretation of what the word means. "Avoidance" is not defined in statute, but a basic definition would be using loopholes in the legislation to achieve a tax outcome that is contrary to what parliament's intention was when the law was passed.

    Given that the intention behind ISAs, for example, is to encourage people to save, you cannot possibly sensibly say that making use of them constitutes avoidance. It is legitimate tax planning.

    If you're going to claim that using personal allowances is avoidance, you might as well say that deliberately taking a pay cut is avoidance!

    Sometimes, when avoidance cases go to court, it is held that they work (e.g. Arctic Systems!). In so far as that is the case, yes, avoidance is legal. In other cases, however, avoidance schemes are held not to work. These clearly are not legal.

    Evasion (generally involving an element of "sham" - i.e. where the fiddle relies on aspects of it that have to be directly concealed or lied about, whereas avoidance generallt hinges on interpretations of the law) clearly isn't legal, and in some cases may be criminal. If HMRC successfully prosecuted someone for tax irregularities having discovered that they have been hiding money in an offshore account, I'd be willing to bet that the case involves evasion - I'd be very surprised indeed if anyone were prosecuted for what HMRC classes as avoidance.

    Say what you like about avoidance, but "the average working man" very definately isn't involved in evasion. Furthermore, even if we are talking about avoidance in these cases (and, setting aside this utter nonsense about ISAs/personal allowances/etc being avoidance, it's pretty hard to enter into an avoidance scheme if all your tax affairs are pay-as-you-earn, as is the case for the average taxpayer!), said average man generally doesn't have access to an offshore bank account.

    ReplyDelete
  4. It really is most unfair that only the rich can afford properly bent accountants with expertise in evading tax.

    Seriously, I think a lot more tax would be collected, and people would be happier to pay it, if the system was far simpler. It seems to be designed mainly to provide employment for tax men and accountants. Oh yes, and disguise the amount the gummint is taking from us.

    ReplyDelete