Lessons In Morality From Nu Labour

I see that Stephen Timms is making it very clear in all orifices of the media that in his, and the government's view, tax avoidance is immoral.

Using emotive words such as "rob" and "cheat" to describe tax avoiders, thus implying that tax avoidance is illegal, he signalled that Labour will now be going on the offensive over this issue.

Here are a few thoughts on the matter:

1 It is perfectly reasonable, sensible, moral and pragmatic to do your utmost to reduce your tax liability legally. Tax avoidance is a legal way to reduce tax liabilities (whether it be a complex scheme devised by lawyers/accountants, or simply using an ISA).

2 Tax avoidance is not an issue of morality.

3 During the years of plenty, Labour chose not to close the so called tax avoidance "loopholes" that they are now screaming about. Why did they sit on their hands then, if this is such an important issue?

3 This is merely a way for Labour to pass the blame, and take the heat off their own economic mismanagement, onto others for the fact that the country is now bankrupt.

During the years "of plenty" Brown had the chance to build up some reserves that could have eased the pain now. He chose instead to "spend, spend, spend", leaving nothing for the "rainy day". To try to blame tax avoiders for this failure in economic management is hypocritical.

4 MPs are not in a position to lecture the rest of the population on the subject of "morality", given their own "shortcomings" in this area (eg house flipping -Darling has flipped his four times in four years to make the most of his allowances, tax evasion, claiming the full cost of mortgage payments etc).

5 Labour is happy to consort and cavort with tax avoiders, eg it gave tax exile Philip Green a knighthood, surely he is an "immoral" person by their definition?

6 Many of the tax havens that Labour are so angst ridden over are actually still part of the rump of empire, as such we do have more than a little influence over them. Shouldn't they have tackled this issue many years ago, if it really is of such importance?

7 Tax avoiders have not bankrupted Britain. Brown's bankrupt Britain is entirely of his own making. No matter what extra tax Labour think they will be able to derive from their new found "moral crusade", it will be a drop in the ocean wrt balancing the books.

8 Lloyds the government funded bank offers tax avoidance advice to its clients.

Lessons in morality should not be delivered by hypocrites.

Tax does have to be taxing.

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Above The Law

It seems that our "honourable" members are regarded by HMRC as being above the law.

That at least is according to this article in The Sunday Express.

I assume that the "special status" of MPs, and the fact that HMRC seemingly treats them with kid gloves, is due to the fact that HMRC has been politicised during Brown's tenure of the Treasury and Number 10.

How ironic that the voters (ie ordinary taxpayers) are not treated by HMRC in such a deferential manner!

"TAX inspectors who suggested investigating MPs were threatened with the sack, a whistleblower claimed last night.

Thomas Casagranda, a former tax compliance officer with HM Revenue and Customs, said MPs' tax affairs were effectively 'above the law' because senior managers refused to scrutinise them.

Mr Casagranda, who quit his post at HMRC's Reading office 18 months ago, said he had been 'shocked' by their reluctance to act.

He confirmed he suggested an investigation after receiving a tip-off that an MP was failing to declare rental income from a property.

He said: 'During a routine meeting to discuss possible projects, such as investigating taxi drivers or subcontractors in the building in??d???u???stry, I suggested running a project on MPs.

'The meeting went on as normal but afterwards I was taken aside by the head of the regional risk intelligence team and told I would be 'out on my ear' if I mentioned MPs again. I was told that if I looked at an MP's tax return or checked them out on PAYE records I would face disciplinary proceedings.

'I was boiling with anger afterwards because I was effectively being told there was one law for MPs and one for everyone else. I was being leant on very heavily to drop it and it was quite clear that the manager who was leaning on me was being lent on himself from above. It was disgraceful.'

MPs' tax returns are dealt with by a special unit which also handles celebrities.

But Mr Casagranda, who is writing a book on his experiences at HMRC, said there was no similar ban on investigating famous names.

His claims will raise fresh concerns about the apparent impunity of MPs milking the system.

Dozens are thought to have avoided paying capital gains tax on their taxpayer-funded second homes by nominating them as their main residences for tax purposes.

Communities Secretary Hazel Blears last week paid £13,332 in capital gains tax after it emerged she had avoided it on the sale of a previous home.

She insisted she had done nothing wrong. Work and Pensions Secretary James Purnell has also avoided paying capital gains tax in the past but has not offered to repay any cash.

In the wake of the expenses scandal HMRC has launched an inquiry into whether MPs have been routinely avoiding capital gains tax.

Last night it denied Mr Casagranda’s claims and insisted MPs had not been above the law.

A spokesman added: 'We cannot comment on the tax affairs of clearly identifiable groups of taxpayers. One of our key roles is policing the tax rules and we do this very effectively.' "

Tax does have to be taxing.

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Snouts in The Trough - No Special Rules For MPs

From the horse's mouth (HMRC) itself:

"There are no special capital gains tax rules covering MPs' homes."

Does this mean that MP's, in the event that they have underpaid tax, may expect a tax investigation going back several years? That is what would happen to the rest of us, were we to find ourselves in this situation.

It would be a salutary lesson for the people who gave HMRC its extra powers, and who politicised it, to be on the receiving end of one of its investigations. It might even bring MPs closer to the people!

I assume that the offending MPs will be named and shamed by HMRC!

Source The Times:

"Was HM Revenue & Customs warned several years ago that MPs were playing fast and loose with the tax system as regards their homes? So claims Thomas Casagranda, an HMRC employee, who says that he highlighted for his local compliance team the use of second homes by MPs and whether this should be taxed. "My idea was instantly shot down in flames by a manager and I was told that if I looked at a local MP’s tax returns, I would face conduct and disciplinary procedures."

As Ken Frost, a long-time critic of the taxman who drew Casagranda's letter to my attention, points out, if the profits from second homes are not taxable, then repayments by Blears et al would be a tax overpayment. If they are taxable, then they owe interest and fines.

The HMRC ducks the issue. "We cannot discuss identifiable individuals' tax affairs. The capital gains tax relief for people’s homes applies to only one residence at any one time," they tell me. "More than one home can qualify for relief at the same time but it will completely depend on the facts of the case. There are no special capital gains tax rules covering MPs' homes."

Tax does have to be taxing.

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Snouts in The Trough - Suggestion Ignored

My thanks to Thomas Casagranda for giving me permission to post a letter that he sent to the Mail on Sunday, re second home profits.

I wonder how HMRC are able to reconcile their reluctance to look into this issue, with the sudden "enthusiasm" of some MPs to now pay the tax on these profits? Either these profits are taxable or they are not.

In the event that the profits are not taxable, then the payment made by Blears etc will be classified as a tax overpayment. In the event that there is a tax liability, then the underpayments of tax are surely subject to interest/fines?

"Subsequent to Ian Galagher's article dated 11/05/2009, I feel compelled to write.

In 2005/06 I highlighted, for my local compliance team, as a revenue employee, the use of second homes by MPs as a viable revenue project. My idea was instantly shot down in flames by a manager, and I was told that if I looked at a local MP's tax returns, I would face conduct and discipline procedures.

In my opinion, it is too little too late, and if HMRC targeted the MPs a few years' ago, the foul scandals besmirching the Commons and Lords would, possibly , have not occurred to the extent that they have.

Thomas Casagranda"

Tax does have to be taxing.

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Benders

"We will advise Ministers on new legislation to close down avoidance schemes and on simplifying current anti-avoidance legislation to make to easier to operate and understand while preserving its effect."

Source HMRC Delivering Our Vision Business Plan 2009-10 (page 8).

So that will include house flipping schemes used by MPs then?

How ironic that had MPs not been braying on and on about the "evils" of tax avoidance (which is perfectly legal), they might not have found themselves in the shit now.

Maybe they were of the view that "tax avoidance" is only that which is practised by "wealthy" individuals with offshore accounts?

What a foolish and ignorant notion that is.

Now they know better!

Tax does have to be taxing.

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