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?

, no individual wants to - or should - pay more than their share under the law of the day.

Certainly not. However, because rich people can legally avoid a proportion of their taxation, they pay less than their share. Which means the rest of us pay more than our share. So, surely you can see avoidance is wrong.

The loopholes should be closed so that rich individuals and companies have to pay their share. I would include in this that the government was wrong to U-turn on their idea of limiting tax relief on charitable donations. Anyone would still have been able to give as much of their disposable income as they wished to charity; they'd just have had to pay (most) of their fair share of taxes needed for essential services rather than their own pet interests.

if you're wealthy you don't deserve it

People do earn weath quite often you know.

I'm not a communist.

I believe in civic society and that paying your fair share of taxes is part and parcel of being a good citizen. How is it right that I pay a greater % of tax and NIC than a multi-millionaire? I am a higher rate tax payer and I am charitable person after paying my taxes (gift aid too - not avoidance - an incentive). I can do good and pay my taxes.

I completely agree with you MissPiggy!

So much time and money is spent fighting these schemes, money which would be much better spent elsewhere.

I understand that one of the ways to avoid higher rate tax is to set up a limited company where your money goes through, so you only pay 20% tax. This is dishonest so YABU.

Just because it is within the law does not make it morally right.

YABVVVU, OP. And thoughtless.

Yanbu. If I could avoid paying as much tax as I do, I would, as I believe most people would if their being honest.

I think Stephen Pounds calling for Gary Barlow's OBE to be recalled is a joke. He isn't being honoured for his tax contibutions and there's no evidence the investments were purely for tax purposes (though I'm sure that helped).

Can't get too worked up about it one way or the other tbh, it doesn't seem alot different to the people who purposely live abroad or have foreign banks accounts but make their money from business in the uk!!

hardboiled
both DH and I run our businesses through companies for various reasons including tax planning.
If the government are too thick to level the allowances between onshore taxes, that is their fault.
BUT
we both pay our CT here in the UK
we do not move our companies to Jersey, resign from them and then draw artificial loans.
THAT is what Jimmy Carr has done.

Am I the only one hoping that the 'morally wrong' comment from Cameron will lead to a flood of newspaper stories on the morality, tax and otherwise, of him and his cronies?

Back to Basics Mark II?

If the HRT threshold was higher, and if the government didn't tax everything the possibly could, then more people would feel that the system is fair and wouldn't do what they can to avoid paying.

Tax avoidance means the majority of people earning eg £30k pa are paying a greater % of their income in tax than those earning £3million pa.

Narked
like this you mean ? :-)

Outraged, what do you mean? Most people are not wealthy!

I never said most people are wealthy. What do you mean?

"YABU, avoidance is choosing to interpret the law so that it gives a tax effect that is contrary to the spirit and intention of parliament"

actually no.

1. tax legislation is complex, and open to interpretation. The 'spirit and intention' is often as clear as some very unclear mud.
2. some tax breaks are intended, but often not taken up because companies don't know about them (so tax-efficient arrangement by a knowledgeable advisor is with the intention of the law)
3. taxation sometimes effects things it wasn't intended to (hence careful arrangement is a necessity)

you presume that tax legislation is straightforwards enough to be a matter of 'sneaky vs non-sneaky'

It really isn't.

I agree outraged. I also think that HRT payers pay too high a percentage on their tax and if it was more fair ie. everyone paying the same percentage (obviously with a decent personal allowance) towards tax then there would be less tax avoidance and tax evasion.

"
Tax avoidance means the majority of people earning eg £30k pa are paying a greater % of their income in tax than those earning £3million pa."

inequitable taxation makes this the case.
council tax particular makes even relatively poor households pony over 10% + of their post-income tax income
Fuel taxation is also extremely inequitable (consider the tax portion of £200 pcm on fuel when you earn £15k..)

even within PAYE payers the poorest wind up shelling out a higher amount once secondary taxation is considered.

Krumbum
If you are a sole trader, you pay tax at 29% on everything you earn over £7,000 and 40 and 45% once earnings rise.

If you are the director of your own limited company, it pays tax at 20% for the first £300,000 and so long as you plan carefully and have several shareholders, that's IT.
Perfectly legal. Affects everybody earning over around £20k. Mad not to.

The Middleton family have a partnership - they have been VERY VERY canny in how they arrange things. But still legal.

GREED is all i can say legit or not

This really angers me. If there is a way to plan your tax affairs to reduce your tax burden, so long as this is not illegal then of course individuals should be able to do this without being pilloried for having dubious moral character or whatever. What a load of crap. If the Inland Revenue can't keep up with these schemes then that is their problem. Believe me, the IR are very wise this stuff. The difference between what is illegal and what is not often comes down to interpretation of a few words in the relevant tax legislation. Carr will have had this stuff signed off by lawyers and accountants to the Nth degree as the downside is obviously big (the IR are ruthless in pursuing for unpaid taxes).

If it was legal I would do exactly the same thing (and as I lawyer I am very risk averse) - I say that as someone who pays higher rate tax, our household's effective rate of taxation is 50%. I am happy to pay taxes in accordance with the law and I believe this is beneficial to society. I am lucky to be well off but I am far from a multi millionaire and I work bloody hard for my money.

To be clear - I say this as a lawyer for a magic circle firm who has worked on countless tax structures for companies - banks - and individuals who do all sorts of clever stuff with their P&L / income etc to minimise tax paid / use accrued losses etc etc (less appetite since the GFC as obviously less profits). Every year in the Pre-budget report, the chancellor will indicate changes to tax legislation which close loopholes (or not) and many deals will get killed as a result. This has been going on since time immemoriam and frankly I am amazed that Cameron has opened this can of worms by condemning Carr as he has, because companies are at this as well and believe me the figures involved make Carr's efforts look like pocket change.

You mark my words - there will be some very nervous politicians in Whitehall tonight as they consider various tax saving measures they personally have employed. Similarly I would expect Dave to be getting some pretty urgent calls from some of his big donors over the next few days. You wait and see them all come out of the woodwork.

thekids
why am I greedy to minimise the amount of MY income that goes to be wasted on weapons, oil industry subsidies and MP's expenses?

And don't even get me started on the inefficiency of government bureaucracy / MPs.... How much of each tax pound actually gets spent on the end result??

What did you mean by 'people do earn wealth quite frequently'
Talkinpeaceto, then the law needs to change. But no penalise low earners, 7000 is too low to start paying tax should be at least 12000. But 300,000 at 20% is crazy too low.