For reasons best know to HMRC the UK (unlike other countries) includes a figure for avoidance within the tax gap estimate.
Aside from the fact (cue the usual posts about me talking about straw men) that avoidance is perfectly legal and logical, actually estimating something that is an unknown is somewhat "problematic".
Even "Jack" admitted as such:
"..slightly contentious issue ... what might the intention of Parliament be?"
Anyhoo, ignoring the fact that the figure is wrong (as it contains unknowns) last year's tax gap was allegedly £42BN...or not, as the case may be!
Andrew Tyrie attempted to extract a sensible answer from Jack about the difference between "closing" and "reducing" the tax gap.
Jack, being a true civil servant, spoke in gobbledygook; saying that there had been much debate as to whether ‘close’ meant ‘close so that the door is aligned with the frame’ or ‘the process of closing’.
‘It is the second of those that we’re doing’.
All clear now?
No?
Neither was Tyrie who said:
"Classic Sir Humphrey reply".
Tyrie then moved onto the emotive subject of avoidance, and quite rightly asked:
"Is it right or wrong that individuals and companies should structure their arrangements to minimise tax?"
Hartnett said the answer depended on whether the question was a legal or a moral one. However, he did reluctantly admit that "avoidance is not illegal".
Tyrie rounded off by noting, on the subject of avoidance, that people were being stigmatised "doing something perfectly logical, reasonable and inevitable".
Quite!
Herein lies the problem, as the above exchanges illustrate, HMRC and Jack have their own agenda. That is all very well if they were a political party, but not acceptable for a government agency.
Watch it here Committee
Tax does have to be taxing.
UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.
Quote ID code "ABC" when contacting a QROPS specialist.
Professional Cover Against the Threat of Costly TAX and VAT Investigations
What is TAXWISE?
TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.
To find out more, please use this link Taxwise
Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.
Click the link to read about: Tax Investigation for Dummies
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"
If Jack wants to eliminate tax avoidance he'll have to abolish personal allowances i.e. tax codes.
ReplyDeletelf the clowns at the HMRC think they can eliminate tax avoidance without first there be a need to sipmlity the tax code.
ReplyDeleteThen all they will end up doing is pissing alot of money up the wall.
For those who wish to see the HMRC go hang. Then just give the fools a rope and then they will do the job by themselves.
"Relationships are at the heart of what will make HMRC a great place to work."
ReplyDelete"In any organisation, there's always room for improvement and ExCom is committed to listening and learning from our greatest resource - our people."
Agreement between HMRC and ARC on the 2011 People Survey.
"Excom accepts that action is required to improve the leadership of HMRC and acknowledges the need to strengthen trust in and across HMRC's leadership."
"The way in which this work will be carried out will be intended to build trust through a high degree of involvement and collaboration with people at all levels in HMRC."
Someone else can sort out the full detail of "Jack's" postings today, but I am sure you all get the idea......
Wow, what next.
ReplyDeleteMore sweeties?
More awards & attaboys? - results out soon...
New electronic whiteboards - looks more professional and up to date, but on second thoughts, everyone has a vdu - why not put the stats and other Pacesetter outputs on the vdu's every hour, it could flash up like a real big brother piece of technology showing individual performance compared to hourly targets, PDE's, the weather and chicken gizzards.
How long before compulsory star jumps and the company song in the carpark?
Remember they used to make the minions stand for the daily hub...
Who is supposed to be in charge of this lot, is it the treasury, The Chancellor, The Minister, or should the question be is anyone in charge?
ReplyDeleteThere does not appear to be an ounce of moral or legal responsibility remaining, for such an organisation that is very strange.
It appears that the NAO, HMIC, IPCC, various Commons/Treasury Committees and the unions are all toothless tigers.
The public, taxpayer or customer, depending on your viewpoint, does not appear to care.
Verily it is a pile of dung!
@20 September 2011 12:18
ReplyDeleteI think this is the straw man argument that Ken is talking about,
No sane person sees the personal allowance as a form of tax avoidance. It's been there for decades, successive governments purposefully left it there.
Everyone knows what it is and what it's there for and if sad pathetic accountants and idle commenters here want to pontificate over whether it's 'avoidance' or not then it's their problem.
It's not, it's just a personal allowance, Now just grow up and accept it and find something better to do with your life.
Tax avoidance is where people take advantage of pieces of legislation that weren't intended to be exploited, which is why governments of any persuasion will attempt to shut them down or at least tighten the legislation so that the country isn't screwed over by someone who spends too much time concentrating on formulas. It's a really simple premiss.
@20 September 2011 21:21
ReplyDeleteWell, if Daily Mail readers insist on the public sector following the example of the private sector, then it'll be the fault of the people whom your taxes are paying for their fatcat existence and pensions
For instance the current and board of directors of RBS, Barclays et al.
Ken,
ReplyDeleteDo you have a link to the notes of Hartnett's evidence?
Cheers
Stew G
Not so long ago HMRC spent a great dealof time explaining why they could not possibly calculate the "Tax Gap"....
ReplyDelete"Measuring the “tax gap” – an update
HMRC is today releasing details of analysis from 2005 that attempted to derive broad-brush estimates of the direct tax gap (i.e. across all taxes) at the start of the decade.
Such analysis is highly problematic due to lack of data, subject to high
margins of error and therefore unreliable. For this reason HMRC does not
publish estimates of the overall tax gap. Only two other countries have
published an analysis of their tax gaps, the United States (estimated direct tax
gap of 14% in 2001) and Sweden (first estimated total tax gap of 8% in 2000,
now around 10%).
Among the reasons that analysis of the overall direct tax gap is problematic
are:
• there is no straightforward way of arriving at a top-down estimate of the
theoretical tax liability (unlike for indirect taxes). For example, it is
possible to derive an estimate of the total VAT liability from aggregate
consumption figures, but similar figures for direct tax cannot be derived
in the same way from income or profits figures because of the many
other factors that affect the liability of an individual or business;
• many issues bearing on the determination of tax liabilities involve
judgements that are not unambiguous and may ultimately only be
settled in the Courts. This is especially true of corporate tax; and
• many of the high-risk activities are derived from concealment or
operate in the hidden economy. Detailed income data, required to
estimate the tax base, is largely derived from tax data, which, by
definition, does not include a large proportion of these undisclosed
activities. There is, for example, not even a reliable estimate of the size
of the informal/hidden economy.
http://www.hmrc.gov.uk/research/measuring-tax-gap.pdf
@21 September 2011 21:07
ReplyDeleteGetting such data would unfortunately mean wide scale spying on the people of the state and that's not good for anyone no matter where you sit on the political fence.