HMRC Is Shite

HMRC Is Shite
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Friday, 17 May 2013

Stemcor



Tax does have to be taxing.

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10 comments:

  1. Interesting.

    Krishnan looked pretty badly briefed on the Inheritance Tax point but then Hodge looked a bit disingenuous when she denied that she knew what the trusts were for. They could have been straightforward asset protection for future generations ... but I'd have expected her to say that if that was the case, so I wonder if her dad did do it for Inheritance Tax planning, which is now obsolete due to Business Relief.

    On the transfer pricing, I've never seen any evidence showing that Stemcor are at it, but again you'd expect Hodge to be able to give a fuller explanation of how they arrange it to ensure the business's tax is, as she claims, consistent with the substance of where it earns its money. It was a bit thin, but then I got the impression these were additional questions at the end of a longer interview, so I guess she just might not have been fully prepared for them.

    What was your take on it, Ken?

    Stew G

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    1. For a politician to use a trust he/she has to show no knowledge of the management/decisions taken wrt the trust; as such Hodge could not claim that she had "knowledge", otherwise the basis of the trust could be challenged.

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    2. But the question wasn't about management decisions taken by the trustees after the trusts were set up; it was about the reason they were set up in the first place.

      And in any case, I thought the important thing was that the settlor (which, as far as I understood, isn't MH anyway) doesn't have influence over the trustees' decisions, not that they don't have knowledge of them, but then I don't know much about trusts. I note you've explicitly referred to politicians, so maybe there's something specifically related to MPs?

      Anyway, you're being uncharacteristically enigmatic about this one, Ken. Are we to understand that you accept her explanation?

      SG

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    3. No I am not being "enigmatic", I being "busy" with weekend stuff (ie putting my feet up) and will not trouble my mind with MH or HMRC:)

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    4. A blog post and two comments now and still no clear steer on what you think about the interview. Perhaps you and I have different definitions of "enigmatic" (as we do of "tax avoidance", of course).

      But no matter. Enjoy the rest of your weekend and I'll look forward to seeing what you have to say in the week! :)

      SG

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    5. Margaret Hodge MP - apology
      http://www.telegraph.co.uk/finance/newsbysector/industry/9740964/Margaret-Hodge-MP-apology.html

      Margaret Hodge MP - Contrary to our report “Hodge faces challenge over family firm’s taxes” (Nov 20), Stemcor, in which Ms Hodge has a small shareholding, has not abused transfer pricing to avoid tax. We accept that there is no inconsistency or hypocrisy in Ms Hodge criticising other companies for tax avoidance and apologise to her for any contrary impression.

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    6. A rambling and shambolic interview, imho.

      Transfer pricing can be used as a tax avoidance tool.

      The IHT discussion was muddled, the issue of why the trusts were set up neatly dismissed "I don't know" and the value of MH's holding of Stemcor kicked into touch by the avoidance phrase "it is a small proportion" (or words to that effect).

      I am none the wiser as to any of the issues that Channel 4 tried to raise.

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    7. I agree with all of that, although "Transfer pricing can be used as a tax avoidance tool" is a truism that doesn't really add anything. It's a bit like saying "literacy can be used to incite hate crime". Transfer pricing could just as easily be used to artificially inflate one's tax bill as reduce it.

      Stew G

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    8. I agree, the "TP" bit was a complete waste of space; I have no idea why I bothered to say it.

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  2. I think hypocrisy does rule for the fragarant Margaret. Channel 4 were hopeless on the IHT issue and she neatly sidestepped the other rather dull questions.

    The question that should have been asked is why she and her Committee did not vehemntly oppose the introduction of Sect 554E(12) ITEPA 2003.

    Readers will recall that FA 2011 introduced the anti avoidance (let's kill EBTs) disguised remuneration rules with great fanfare from HMRC. Various commentators got excited because the new rules were so complicated that clearly there would be both loopholes and unintended consequences. I think it was John Whiting who pointed out that the new rules regarding " Employment Income provided through third parties" might apply to MPs who by then were paid by IPSA. I remember at the time thinking that perhaps someone would wake up and tell the draugtsmen to start again with rules that could be understood.

    Some hope! Instead we got 554E(12) that exempted MPs from any charge under the disguised remuneration rules. You can see the issues that might arise with the "generous" expense allowances and the second homes.

    I am surprised that no one from Google/Amazon/Starbucks pointed out to the fragarant Margaret that if they could insert a clause in the Finance Act to exempt themselves from a tax charge then all these problems would disappear as clearly they would bring in clear rules to exempt themselves from all taxes.

    Simple!

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