To think Gary Barlow is worse than a benefits cheat?

[Roshbegosh]

People cheating on benefits do at least need the money .... What he has done is hard to excuse IMO

Isn't this matter going to be appealed anyway? If so, it may transpire that Barlow won't have to pay anything back.

Tax legislation and its interpretation is a bit like a game of cat and mouse. The lawyers and tax advisors find the loopholes, the Revenue tries to close them. I think there's an element of luck and risk involved if you're trying to minimise your tax bill, but again, why on earth would anyone voluntarily pay more tax than necessary?

I honestly don't believe the people on this thread who are denouncing Barlow (and Amazon and Starbucks) and claim they would pay more tax than strictly necessary if they were a high net worth individual. I can sort of understand that it might be a bit of a hassle to register as a sole trader, employ an accountant and enter into a convoluted arrangement if you're only earning £30,000 in the first place (so it's not as if the savings will be vast). If you're earning millions, though, why wouldn't you minimise your tax bill?

People keep talking about the loophole GB took advantage of. There was no loophole - that's why he owes money. His "scheme" was a sham. Read the judge's words:

He said: “Icebreaker is, and was known and understood by all concerned to be, a tax avoidance scheme.

“The aim was to secure [tax] relief for members, and to inflate the scale of the relief by unnecessary borrowing.”

Tax avoidance, not tax evasion though.

Leopard, I'm definitely NOT a high net worth individual so this is hypothetical, but I think I'd still be willing to pay my taxes if I were.

I mean, I'm currently happy to pay tax properly when God knows it'd be useful to have a bit more in my pocket. If I earned the kind of money that meant I could employ an accountant, run up flower bills in the thousands etc, I can't imagine suddenly feeling more inclined to penny-pinch.

Well, when "tax avoidance" turns out not to be allowable (as in the GB case) the semantics get quite messy.

freckle i agree totally.

the people who will never step out on their own and own their own company or become a sole trader and are married to paye or the benefits system for all of their lives.

I own and run my company actually mrsbucket. I still think GB is worse than a benefits cheat :)

how when he has paid millions in, that goes to all of us.

jeesh its not hard to see the difference

He hasn't 'paid them in', they just get taken: that's how tax works. He didn't pay it because he's nice - he paid as little as he could, because he isn't.

Gary Barlow's scheme was not illegal, it was ineffective. He was told (no doubt) that if he arranged his affairs in a particular way then he might reduce his tax bill. That advice will have been hedged with a caveat that the tax result was not certain and could be challenged. That happened and it turned out that HMRC interpretation was preferred by the court - it would not have gone to court had it been clear what the tax outcome was and it will undoubtedly have been a finely balanced argument with QC opinions on both sides.

This is not comparable to a benefit cheat:

a benefit cheat takes money that does not belong to them through fraud.

GB was trying to reduce the amount of money he paid to the country by arranging his affairs in such a way as to minimise his tax bill. Maybe you are of the view that everyone should try to MAXIMISE their tax bills but, with that, it is difficult to know where to stop. I could increase my own tax bill by not claiming my personal allowance. I do actually make use of my personal allowance and do not brand myself a "tax avoider" in using a legitimate allowance. Equally, you could increase your tax bill by not deducting pension payments, or business expenses or Gift Aid Relief. Nobody would expect you to do that because paying the right amount of tax is not immoral.

Steamingnit do you pay more tax than you owe? If not, does that make you not nice for paying "as little as possible"?

Everyone uses legitimate means to reduce their tax bills. GB was advised that there was another means to do this legally. It now turns out that this arrangement of his affairs did not have the tax effect he expected it to have so this means he will have money to repay but ONLY because the way our UK tax system works is through self declaration that is later on checked. He self declared on the basis that the scheme was effective (and will have pointed out SPECIFICALLY to HMRC that he was doing this) and paid reduced tax accordingly. Now he knows the scheme didn't work, it turns out he owes more tax which, no doubt, he will pay. He will at no point have tried to hide any of what he was doing (the law is strict on that and all accountants and lawyers will have ensured that he made a full disclosure to HMRC to explain what he was doing and what he expected the tax effect to be and why) and never acted criminally or, indeed, illegally.

I reckon the law just about has this right now: totally artificial schemes are ineffective so soon people will give up doing them as they simply lose a lot in fees for no gain. A recent new General Anti-Abuse Rule has been a game changer. In the meantime, GB arranged his affairs in the expectation of a particular tax outcome, explained to the authorities clearly what he was doing and why he expected the tax outcome that he did. As they have a right to do, HMRC disagreed, it went to court and HMRC's interpretation of complicated legislation was preferred and so GB will pay some more tax. No, that is not the same as stealing money.

Ataxlawyer that was a really long way of explaining that as a tax lawyer, you think what tax lawyers do is a-ok.

Tax lawyers have a duty to the client to get them the best possible outcome within the confines of the law. I'm an accountant, we work by the same principle.

Although MN seems to be full of people wanting to pay large tax bills, in reality this is seldom seen.

Tax lawyers help the wealthy play the system. Benefits cheats are also playing the system. No moral difference between them. The only difference is that the lawyers are obviously more skilled at exploiting the law.

fifi - as I said earlier on the thread, the big 4 (or the next tier) wouldn't go anywhere near this kind of scheme because they know it's sailing very close to the wind. Making it out as an entirely legitimate enterprise which any sensible HNWI would invest in is disingenuous.

And (this is a more general comment), I do wish those of you who defend these schemes wouldn't treat everyone who thinks this type of tax avoidance scheme is wrong as naive and slightly stupid. It's very irritating.

Perhaps you could see that there are very few on this thread " defending " these schemes.

Many posters are just pointing out that they are NOT illegal and that the people who use them are not criminals.

It's possible to hold an opinion which isn't either

" I think they are fine and I'd do it if I could " and

" I think it should be criminalised and they should all be thrown in jail "

I also notice that Many posters have implied that they would like to pay more tax, although no one has come out and said that they actually do so, even though it's very easy .

I wonder why that is?

Ataxlawyer, GB makes his millions from the little people who buy his music/attend his concerts. He could take the view that, by paying tax without playing your game, he would be giving something back. Apparently not. He was obviously advised by crap tax lawyers because he's now going to be coughing up (plus penalties?) and has suffered reputational damage.

Except, of course, that this concoction offered insurance (through a Gibraltar company!) in the event that HMRC didn't care for the arrangement. Let's keep the money away from the state!

And when I speak to my accountants I don't find it hard to ask which of the schemes they offer are approved by HMRC. If the government want to offer me tax breaks for investing in ISAs, woodlands, films, VCTs - fine. Otherwise, no thanks.

Benefit cheats are completely different! They lie to get money. Tax avoidance schemes are declared to the HMRC.

KristinaM has it on the nose. I never said it was ethical, just legal. And not dishonest (unlike benefit cheats). I don't admire the people who do that kind of thing even though sometimes I have had to help them do it. You would be amazed at who does it. Absolutely amazed.

That's great you feel like that KristinaM - I obviously wasn't talking about you so I'm not sure why you're feeling attacked (assuming your post was in response to mine?)

I will say though that the line between illegal and legal when it comes to tax avoidance is rizla paper thin in some instances.

Ataxlawyer, if you really are a tax lawyer you'll know that using your personal allowance, ISA etc is not tax avoidance because tax avoidance is manipulating the laws to achieve a tax advantage that Parliament has not intended.

For example, highly contrived schemes that serve no economic purpose but to reduce tax.

Been lurking on MN for a while...felt compelled to register when I saw this thread.

A few pages ago Rootypig posted some statistics, which have not really been discussed. A great shame, because they are statistics which are constantly ignored: by politicians, by the majority of the press, and by extension the general public. But they are statistics which should be plastered over public places, all over the newspapers, in schools, hospitals, universities, anywhere you can think of. Because only then will people realise that they are being lied to.

A TUC poll revealed that people believe that 27% of the entire welfare budget is claimed fraudulently. In fact, for 2011-12 it was 0.8%, or £1.2bn. People believe in lies because they listen to what they have been told by the likes of George Osbourne and Ian Duncan Smith. They would like to believe that their neighbour has fraudulently claimed money in order to pay for something that they cannot themselves afford, rather than that neighbour receiving a gift, say, or saving. They would prefer to be bitter, twisted and angry rather than support their neighbour.

Meanwhile, over £12bn of benefits go unclaimed every year. So in fact, if there was no benefit fraud, but everyone claimed the amount to which they are entitled, we would be worse off as a country.

Now let's have a look at tax. HMRC estimate that they were underpaid £35bn in 2001-12. This money is lost through schemes such as the one GB has been involved in. But nobody focuses on this. People would rather point fingers at 'benefit cheats' and 'scroungers' than the real drains on our society. The government - and by extension the right wing press - encourage this, because they want to divert attention away from their rich donators. This is why so little effort is made to close these morally repugnant loopholes.

Two more things:

To the person who made the despicable comment about people 'getting off their lazy asses to find work': only a tiny proportion of social welfare goes to the unemployed. Far, far more goes to people IN WORK. In fact, the majority goes on pensions.

And finally...everyone pays tax. Every single person. Even the unemployed.

Wow long post for my first!

Minesril, well done.

GB may ultimately have done us all a favour. High profile individuals may now be a little more "generous" .

It is harder for multi-national companies. They have a choice where to plonk themselves. I have been involved in a case where HMRC thought we were paying too much for products from our parent company in the US (thereby suppressing our profit in the UK). At the same time the US tax authorities were beating up our parent company for selling too cheaply to us in the UK. Fucking nightmare

Minesril

Hear hear

Yanbu