To not "get" all the fuss about tax avoidance?

[Peppin]

There is a difference between tax avoidance an tax evasion. Tax evasion is unlawful, tax avoidance is working within the law to minimise tax liability.

I should caveat this post with the fact that I am employed and all my income is taxed through PAYE. If I had more sources of income and more of it, I would not object to paying tax on all of it (by way of example, I never seek to reduce payments by paying cash to plumbers etc.), but equally, I would not want to pay more tax than I had to in order to remain on the right side of the law.

It seems to me that for wealthy individuals, paying an accountant to advise on minimising your tax liability is perfectly reasonable. If the government doesn't like the net effect of this, then it is the job of parliament to pass legislation that closes the loopholes that permit the "avoidance". So why is David Cameron bleating on about tax avoidance as though it were some sort of criminal offence?

Sinister: Tax evasion is unlawful. Tax avoidance is not.As set out in my OP.

Agreed, loopholes that allow people to avoid paying their share should be closed. But while they aren't, it is ridiculous to suggest that a lawful activity is the same as an unlawful one.

"
I don't know why Jimmy Carr has been singled out though and David Cameron and his croonies all have friends and family doing it anyway"

question for you: 13 years of labour government - why do these loopholes still exist?

it just isn't that simple.

I don't think tax avoidance and tax evasion are the same thing.

Some people are in a position to plan their tax. E.g. a husband and wife who run a company can pay themselves so that they make the best use of their tax rates. Equally, when it comes to inheritance tax, it is more efficient to be married than not married. If you want to give somebody a large amount of money, you are also better off planning to gift it in chunks to avoid tax.

On the other hand, somebody who 'employs' a family member to do a job that they clearly aren't doing is evading tax. The same goes for somebody who is pretending that their income is a loan.

Is it Peppin?

It's just not to me. Whether it's legal or illegal, you're taking money out of public services, so it doesn't really make a blind bit of difference.

I was listening to someone one the radio saying it wasnt the job of MPs to comment on morality and I agree

Yes it's immoral, but that is rather subjective and tbh, not that relevant.

It's legal and that is all MPs should be concerned with. If they have an issue, change the law.

But I doubt they will

I agree with that catgirl1976

Sinister - so no accountant (and presumably their families) should be allowed to use the NHS? Accountants pay tax and NI as well you know!

As you are so whiter than white, I'm assuming you don't use your tax free personal allowance, and voluntarily pay 25% tax on that? Yes? Or are you an immoral tax "avoider" too? Maybe you shouldn't be allowed to use the NHS either .

I think some people are confusing sensible tax planning, using rules and instruments provided for the purpose to encourage saving and investment (like some of the things merrymouse describes) with tax avoidance, which is making a deliberate effort to subvert rules and undermine their purpose.

The latter is facilitated by people whose business is to search out and create potential loopholes, knowing full well that they are saling very close to the wind legally and some schemes may turn out to be illegal or ineffective when tested. They are analgous to profiteering computer hackers, seeking to test the system by breaking it to their own benefit.

Employees get benefits (like paid holiday, sick pay and office utility bills paid for them) that the self employed do not.
You get redundancy and employment rights. If our clients do not pay, we go hungry.
Risk and reward.
You have minimal risk so a lesser reward. That is your (and our) choice.

Pensions and ISA's are tax avoidence too you know.

Sinister, I am sure that your employers will be employing accountants who ensure that they pay corporation tax in the most tax efficient way.

Self employed people have to employ their own accountants and they do have to think about tax.

Spot on Lottiegb

Hello again - not all employees get paid holiday, paid sick leave, redundancy packages etc etc... employers can get round all of those things & they do.
Even public sector employers, trust me on that one!

I can't contribute much to the debate other than the views i already gave - as i don't have much knowledge of finance / business issues.

What is a tax-free personal allowance though?
What is the sum of money per month that you can earn tax free (if any)?
Do benefits get taxed? - i think State Pensions do?
What IS an ISA - i've never had the money to get offered one, but i don't understand them anyway.
I wish i did understand more about finance... just don't have time to learn it all right now.

Talkin have you not heard of Dragonfly?

Got to laugh at the hypocrisy of the press like the Guardian are bashing Cameron over the Carr issue and yet have plenty of freelancers themselves.

What is a tax-free personal allowance though?

You don't pay tax on roughly the first £7,500 you earn each year - the sum varies slightly from year to year.

What is the sum of money per month that you can earn tax free (if any)?

Your personal allowance divided by 12.

Do benefits get taxed? - i think State Pensions do?

Depends on the benefit. However, all pensions are taxed as income. This is why contributions from income to a pension fund aren't taxed.

What IS an ISA - i've never had the money to get offered one, but i don't understand them anyway.

Usually, if you invest money, the government will tax you on on interest earned, dividends received and 'capital gains' e.g. increase in value of shares. To encourage saving, the government creates some schemes where you can save a limited amount of money and not suffer tax.

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But if you earned £7,000 in one month and didn't work for the rest of the tax year (e.g. because you had lost your job/been on maternity leave) you wouldn't pay any tax on it - it is the annual amount that is important.

Lapsus - I was vaguely aware of that case but it was such an extreme one that it has not impinged on any of the others that I'm aware of. There are still tens of thousands of some man contractors working through Ltd Co's for Global Plc's

Novack
Freelancers are a different issue - if you work for several people and are paid by the result not the hours then its OK.
The stinkers are things like the head of the CSA or the head of PR for HMRC who are not actually employees of the organisation.

BUT
What Jimmy Carr was involved in was an "artificial transaction" and chances are Gorgeous George might finally get the backbone to declare them ALL as evasion rather than avoidance.

Ken Clarke on QT last night was talking about a catchall provision to cover transactions used solely for tax avoidance. It still needs to be enacted and tested but hopefully should cover these cases.

I worked in the finance dept for an IT company, when times were good, Managment 'complained' about the day rates for contractors and tried to employ them, however when times were bad and there was less work, guess who was first to be let go as they had no employment protection.

I hope they just leave it alone. My dad is a contractor and uses and off-shore scheme and he would be screwed if he could no longer use such a scheme.

He earns good money when he is working, but as a contractor that work is often in short supply, very insecure and offers no holiday pay, sick pay or any other benefits that all PAYE staff are legally entitled to

Big companies wriggling their way out of tax (Amazon etc) bothers me. Individuals don't.

It reminds me off the fuss people kicked up about MPs expenses which was such a tiny tiny tiny sum relatively and the media fuss was great for the government burying loads of real bad news

I think it's interesting that Cameron was so keen to go after Carr, but remained silent on the issue of Gary Barlow using a very similar tax-avoidance scheme. Why didn't you comment on the tax activities of Conservative-supporting Barlow, Mr Cameron?

Thanks merrymouse.