Re~Stirred Forum

Whilst JC comes across even more as a swarmy and now greedy tw*t...yes its a bit rich from the PM targetting him. What about all these big corporations tax avoidance, e.g. was it it not Vodaphone getting away with seemingly millions of unpaid tax only a few years back...

PS. Must admit I looked at such a scheme a while back but took advice and wisely did not take it up.

As I recall, the Vodafone case was effectively about whether a legitimate economic activity took place in (I think) Luxembourg, or whether the company Vodafone had there (and which acquired the German(?) phone company) was just a nameplate on a door. The figures bandied about for the amounts of tax avoided were based on HMRC winning all its arguments in court. They did not, and they probably did not expect to. More tax was paid than Vodafone wanted to pay, but less than the alleged maximum.

Actually, it is the same situation with Jimmy Carr - is the arrangement one of a legitimate economic activity, or is it only a way of avoiding tax? We clearly do not know all the details of the scheme, or even enough to understand how it actually operates. On the information I've heard, it sounds financially unlikely, so there must be more to it. If he's being loaned the money at a zero interest rate, that does not sound like an economically legitimate loan (interest rate is too low!). Also, what are the arrangements for paying the loan(s) back? If the loans are written off after a while, how does he avoid a capital gains charge?

The situation with David Cameron's father appears somewhat different. Firstly, and obviously, can you legitimately attack anyone for the business decisions of their father? Secondly, the funds in question do appear (from the report) to have been indulging in a legitimate economic activity - investing in companies and returning income to the funds, and therefore their owners.

Cameron's condemnation and Carr's comments are equally trite and treat the public as fools.
If you have a lot of money, clever number crunchers will offer you ways of protecting it from the taxman, for a price, and many people will take up the offer. We all know that, and perhaps we would all do it, if we thought we could get away with it. The surprise and faux moral condemnation are absurd, and symptomatic of the general mess we are in.

Amidst all this media reporting about a complicated tax regime it makes me wonder - would a standard flat rate, with no allowances, be better?

Most people on "p.a.y.e" don't get the opportunity to avoid tax, also if p.a.y.e tax payers are owed tax , we are told, we must wait till the end of the current tax year for any rebates.
Gary Barlow is now implicated in tax evoidance, his OBE is being discussed!!! , (the chap who just this minute serviced my gas fire, said all of "Take That" were implicated.)?
I agree though it's big business that needs targetting, rather than individuals. As for MR Cameron why are people suprised? "we're all in this together"( - well those avoiding paying tax are) the rest of us pay as much as can be squeezed out of our wages! .

Barnardhobbit , I have noticed of late you are tweeting,your posts here, and have stopped discussing topics as much as you were before. good though that your quick off the mark to post here with current affairs.

My own view is that we need to deal with the issue of tax havens more generally anyway.

Yes make sure people with a "tax haven" can't "sign on" when they face hard times

The thing about this K2 scheme is that there *must* surely be more to it than the barebones outline the press are reporting - i.e. you simply resign your UK company, set up an off shore vehicle for invoicing, then give yourself 'loans' rather than salary from offshore.

I say that because everyone who has set one of these things up says there has been full disclosure to HMRC. I can't believe they are so incompetent that they chose to prioritise closing relief on charitable giving ahead of seeing how to turn the tap off on this one..... Surely?

The simpler we can make tax the less we'll get this sort of nonsense.

Incidentally, can I predict now that the next big tax scandal will be misuse of R&D allowances....

Yes, but it would still leave the question of how to deal with off-shore tax havens.

Excuse my ignorance Guy The Mac can you explain what R&D allowences are? Me being only a p.a.y.e I am not savvy with the tax system, I know I should be, but I reckon I would need to go back to college, and study financial business or something like it.

Well considering the rest of the world considers the UK to be a tax haven, how about addressing on-shore tax havens first?

We can, but then the money will go off-shore.

Personal tax residency should be a matter of fact although in the past, in the UK, it has been a bit grey and some of the intepretation both by the authorities and individuals has been a bit discretionary. I understand that the rules are becoming much more prescriptive - see this consultation - which will be fairer. I don't think anomalies will ever entirely disappear. For example, I had a friend who worked in the Baltic states who managed not to be tax resident in any of the territories in which he worked or those people lucky enough to have yachts can often use days at sea (and not within any national territory) to avoid residence. Other loopholes should be easier to close. For example, how can it be right that all UN employees pay no tax? Company tax residency is trickier. There are a few jurisdictions which have banned certain overseas transactions, but this does seem to fly in the face of free trade and personal freedom - which obviously doesn't seem to be a problem for certain people on these boards.

Sorry Barnardhobbit no insult meant. I will look up tax abrieviations, to get myself informed

Thankyou Dominator for giving me an inkling to what r&d was , If I read correctly it's resident and domicile? boy having only understood
half of the jargon and definitions relating to being a resident of the uk . I can see how a person could avoid certain taxes.
oh my I may have found ways to avoid tax . not without an accountant though. amazing what a person can do though to avoid paying tax, I will be sharing this info, because after working all my life , I had to "sign on" bloody hell the hoops I had to jump through- I hate it
I am more determined than ever now to push forward my design and prototype to make money, bet your life I will be studying "tax breaks". I will make that my priority. all legal and declared though!!

Well with business venture and studying how to avoid tax, I won't be posting for a while, will keep looking in though. Of course if theres news of equal pay &allowences will update my post. so tara a bit x

R&D allowances are research and development allowances. I don't know much about the opportunities for avoidance that arise from this although I can imagine. I don't know if it's still the case but preferential corporate tax rates used to be given to Irish manufacturing companies. I heard about an educational company who were advised by their accountants that they could claim the lower rates by saying that packing dvds into boxes was 'manufacturing'. They probably got away with it.

Like Dom I can imagine , but could you explain a bit mor Guy, i think its a real problem for the uk economy that we dont invest enough and subsequent govts from the 60's onwards have tried to remedy this - be interested to know how that might be being subverted.

Personally, I don't see this as a being 'the next big thing' because it doesn't have the right ingredients. The concepts are tricky to grasp and there won't be any celebrities involved. No matter how big the sums involved or the audacity of the 'schemes' I imagine it would be more of a Private Eye nugget than a Sunday splash.

To go back to the original comment by bernardhobbit. It appears that the views expressed earlier in the year by my union are being taken up by more and more influential people. The government are now, at long last, looking at dealing with tax avoidance. Bit hypocritical I know but at least they say they are going to deal with it.

It makes sense that when you have a huge deficit and the top 10% avoiding paying tax amounting to billions of pounds you should recoup some of that money to address it. As I have said before; anyone who avoids paying tax are `unpatriotic moral degenerates'.

The only sad thing is that this government thought those who did not pay 50% tax would suddenly pay 45% tax. The term `pigs might fly` comes to mind.

The question of whether more is raised with 45% or 50% top rate has a definite answer, but we don't have it yet... We shall see.

My gut feel about this is that there is a scandal brewing due to the enthusiastic industry popping up around it.

In any given month I get about seven or eight unsolicited cold calls for things I reckon dodgy. They are evenly divided between a) You've had an accident in the past five years and you're due compensation b) You're entitled to repayment of your credit protection policy c) Have you thought about taking on an apprentice d) We can help you keep more of your income and e) We can help you with your R&D tax claim.

Each one of these is probably worth a thread in its own right - but scams/system abuses around a, b, c and d have had the oxygen of much publicity recently - whereas e hasn't yet. Because my company has been doing some R&D I did meet with one 'accountant' (who turned out to be a sales rep really) who assured me that I was eligible and pulled out a contract with an £800 sign-up fee, to be deducted from my first tax repayment. It smelt fishy and so I read the HMRC guidance in depth myself decided no matter what they say I wasn't entitled to the credits for the year in question, though I could imagine how some 'imaginative' descriptions of some of my commercial expenses could make it appear that I was.

You can get the gist of what is allowed here: http://www.hmrc.gov.uk/ct/forms-rates/claims/randd.htm

But given you can now get 225% relief against money you spend on R&D there is HUGE sums to be had for cowboy operators to chase.

I wonder how many people were so chuffed the "accountants" say they are "legally entitled" to this that they just sign-up and the "accountants" just fill in a claim, cross their fingers that it doesn't fall into a random audit sample and just count the money that bounces back their way in commission, and live with leaving the business with bad taxman kudos for the few that get rejected. These types of operations will just treat the whole thing as a percentage game.

At some point someone will do an expose on the sharper end of these operators and the government will no doubt panic and close the scheme thereby throwing out the baby with the bath water.

Just to be clear I'm not saying this is a bad scheme, nor that all people who offer help in navigating these claims are shysters.
The idea of supporting R&D through tax support is spot on, it is vital to our future, however - there needs to be competent administration of any scheme to weed out chancers. I'm nervous that there currently isn't.

As an accountant (albeit not a tax accountant) I have, over the years, come across legal tax planning opportunities and shared them at no cost with friends for whom it applies - usually relates to deductibles or using allowances - not massive amounts, but I've never met anyone not delighted to receive the news.

I'm sure you have Dom, but they'd be less delighted if you said you'd do the paperwork for them, for a token cost, then two years down the line they get done for fraud because the tax planning opportunity, whilst legal, didn't apply to them, I think there is a big amount of that going on with R&D.

I just read big corporations such as coca-cola, sponsoring the olympics, are allowed tax free business, from I believe March to November, a tax loss to Britain of 600million, also foreign business is also bieng allowed a tax haven . Seems offshore tax avoidence is happening in London.
A banker , politician and a person on disability benefit , go to a bar , the banker and politician turn to the person claiming disability benefit , saying your round.

one day the people in this country and the rest of the western world will wake up to the rape going on by the big corps and rebel ?

Maybe ....